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Generic Note Receivable Entries in T Accounts

Published byTamsyn Robbins Modified over 6 years ago

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Presentation on theme: "Generic Note Receivable Entries in T Accounts"— Presentation transcript:

1 Generic Note Receivable Entries in T Accounts
Using T accounts, record the entries for the ABC Company to:

2 Accept a note for an existing AR
Receive a check paying the note

3 Accept a note for an existing AR
Receive a check paying the note Debit Note Receivable Face Value/Principal Credit Account Receivable Face Value/Principal Debit Cash Maturity Value Credit Note Receivable Face Value Credit Interest Income Interest

4 Accept a note for an existing AR
Discount the note with a bank Bank notifies that the note was paid

5 Accept a note for an existing AR Discount the note with a bank
Bank notifies that the note was paid Debit Note Receivable Face Value/Principal Credit Account Receivable Face Value/Principal Debit Cash Proceeds Interest Expense Bank discount Credit Notes Receivable Discounted Principal/face value Interest Income Interest on note Debit Notes Receivable Discounted Principal/Face value Credit Notes Receivable Principal/Face value

6 Accept a note for an existing AR
The note is dishonored

7 Accept a note for an existing AR
The note is dishonored Debit Note Receivable Face Value/Principal Credit Account Receivable Face Value/Principal Debit Notes Receivable Past due Maturity value Credit Notes Receivable Principal amount Credit Interest Interest amount

8 Accept a note for a taxable sale
Discount the note with a bank Bank notifies that the note has been dishonored with bank fee

9 Accept a note for a taxable sale Discount the note with a bank
Bank notifies that the note has been dishonored with bank fee Debit Note Receivable Face Value/Principal Credit Sales Amount of Merchandise Sale Credit Sales Tax Payable Amount of tax charged Debit Cash Proceeds Interest Expense Bank discount Credit Notes Receivable Discounted Principal/face value Interest Income Interest on note Debit Notes Receivable Discounted Principal/Face value Credit Notes Receivable Principal/Face value

10 Accept a note for a tax exempt sale
Record adjusting entry for accrued interest at year end Receive a check paying note (next year)

11 Accept a note for a tax exempt sale
Record adjusting entry for accrued interest at year end Receive a check paying note (next year) Debit Note Receivable Face Value/Principal Credit Sales Amount of Merchandise Sale Debit Interest Receivable Amount of interest earned to the end of the year Credit Interest Income Amount of interest earned to the end of the year Debit Cash Maturity Value Credit Note Receivable Face Value Interest Receivable Amount of accrual Interest Income Interest earned this accounting period

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