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Questions to answer after recording in Practice Problem 4-3 T accounts:

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Presentation on theme: "Questions to answer after recording in Practice Problem 4-3 T accounts:"— Presentation transcript:

1 Questions to answer after recording in Practice Problem 4-3 T accounts:

2 1. Classify all the accounts used in the last group of T accounts on page 2 as Assets, Contra Assets, Liabilities, Revenue, Other Revenue, Expenses, Other Expenses and identify the normal balance type: DR or CR

3 Cash – Current Assets - DR Note Rec – Current Asset - DR Note Rec Discounted – Contra Current Asset - CR Notes Rec Past Due – Current Asset - DR Sales Tax Payable – Current Liability - CR Sales – Revenue - CR Interest Income – Other Income - CR Interest Expense – Other Expenses - DR Miscellaneous Expense – Expenses - DR

4 2.What is the formula to calculate interest? 3.What is the formula to calculate maturity value? 4.What is the formula to calculate bank discount? 5.What is the formula to calculate proceeds? 6.What is the formula to calculate book value of Notes Receivables?

5 2.What is the formula to calculate interest? Principal * Annual Interest % * Time = Interest 3.What is the formula to calculate maturity value? Principal + Interest = Maturity Value 4.What is the formula to calculate bank discount? Maturity Value * Disc % * Time = Bank Discount 5.What is the formula to calculate proceeds? Maturity Value – Bank Discount = Proceeds 6.What is the formula to calculate book value of Notes Receivables? Note Receivables – Note Receivables Discounted

6 6.What value is recorded in a Notes Receivable Past Due account when a note is dishonored? 7.What value is recorded in the Note Receivable account when a note is accepted? 8.What amount is recorded in the Note Receivable Discount when a note is discounted? 9.What amount is recorded in the Note Receivable account when a note matures?

7 6.What value is recorded in a Notes Receivable Past Due account when a note is dishonored? Maturity Value 7.What value is recorded in the Note Receivable account when a note is accepted? Principal or Face Value 8.What amount is recorded in the Note Receivable Discount when a note is discounted? Principal or Face Value 9.What amount is recorded in the Note Receivable account when a note matures? Principal or Face Value

8 Note GS10 10.Who is the maker of the note? 11.Who is the payee of the note? 12.What is the face value of this note? 13.What is the principal amount of this note? 14.What was the amount of interest on this note?

9 Note GS10 10.Who is the maker of the note? Gary Shelton 11.Who is the payee of the note? Westport Company 12.What is the face value of this note? $5, What is the principal amount of this note? $5, What was the amount of interest on this note? $135.62

10 Note JD18 (1) 15.Who is the maker of the note as of January 18? 16.Who is the payee of the note as of January 18? 17.Who is the payee of the note as of February 10? 18.What is the amount of the contingent liability on February 10? 19.What is the book value of note receivables on February 10? 20.What was the net realized (amount and if it is a gain or a loss) on this note after the customer paid the bank?

11 Note JD18 (1) 15.Who is the maker of the note as of January 18? Joanee Davis 16.Who is the payee of the note as of January 18? Westport Company 17.Who is the payee of the note as of February 10? Woodforest Bank 18.What is the amount of the contingent liability on February 10? $4, What is the book value of note receivables on February 10? $0 20.What was the net realized (amount and if it is a gain or a loss) on this note after the customer paid the bank? $ – = $45.85

12 Note BJ01 21.What is the issue date of the note? 22.What is the balance in Note Receivable after the November 30 entry? 23.What is the term of this note? 24.What was the net realized (amount and if it is a gain or a loss) when it was dishonored?

13 Note BJ01 21.What is the issue date of the note? Oct 1 22.What is the balance in Note Receivable after the November 30 entry? $0 23.What is the term of this note? 60 days 24.What was the net realized (amount and if it is a gain or a loss) when it was dishonored? $128.22

14 Note GS11 25.What date will this note mature? 26.What amount of cash will be received on the maturity date? 27.How much interest income will be recorded on the maturity date?

15 Note GS11 25.What date will this note mature? Feb What amount of cash will be received on the maturity date? $12, How much interest income will be recorded on the maturity date? $137.08

16 Note JD18 (2) 28.What date was the note discounted? 29.What is the amount of proceeds? 30.What amount did the bank discount the note? 31.How many days will the bank hold the note or what date period? 32.What amount did the bank received when the note was dishonored? 33.What was the net realized (amount and if it is a gain or a loss) on this note after it was dishonored? 34.What is the balance in the Note Receivable discount account after the note is dishonored?

17 Note JD18 (2) 28.What date was the note discounted? Feb What is the amount of proceeds? $4, What amount did the bank discount the note? $ How many days will the bank hold the note or what date period? What amount did the bank received when the note was dishonored? $4, What was the net realized (amount and if it is a gain or a loss) on this note after it was dishonored? Loss What is the balance in the Note Receivable discount account after the note is dishonored? $0 - the full maturity value is now in Note Receivable Past Due

18 Read p. 135


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