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CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 10-1 Notes Receivable Notes receivable. Issuing a note receivable. Calculating interest.

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Presentation on theme: "CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 10-1 Notes Receivable Notes receivable. Issuing a note receivable. Calculating interest."— Presentation transcript:

1 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 10-1 Notes Receivable Notes receivable. Issuing a note receivable. Calculating interest. Receiving cash for a note receivable. Dishonored notes receivable.

2 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Competency: Accounting Adjustments and Valuation/Accounting for Notes Receivable, unearned revenue and Accrued Revenue Objectives 43 Record accrued income. 2 LESSON 10-1

3 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 3 LESSON 10-1 ISSUING A NOTE RECEIVABLE FOR AN ACCOUNT RECEIVABLE April 3. Accepted a 30-day, 12% note from Duane Jansen for an extension of time on his account, $300.00. Note Receivable No. 11. page 291

4 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 4 LESSON 10-1 ISSUING A NOTE FOR A SALE April 4. Accepted a 90-day, 12% note from Mark Carver for the sale of an appliance, $450.00. Note Receivable No. 12. page 291

5 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 5 LESSON 10-1 1.Calculate interest income. 2.Record note. 3.Record interest income. 4.Enter total cash received. RECEIVING CASH FOR A NOTE RECEIVABLE page 292 May 3. Received cash for the maturity value of Note Receivable No. 11: principal, $300.00, plus interest, $3.00; total, $303.00. Receipt No. 452. Principal Interest Rate Fraction of Year =Interest ×× $300.0012% 30 360 =$3.00 ×× 4 2 3 1

6 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 6 LESSON 10-1 1.Calculate interest income. 2.Record the debit for the total amount receivable. 3.Record a credit for the note principal. 4.Record a credit for the interest income. RECORDING A DISHONORED NOTE RECEIVABLE page 293 June 1. Ruth Javinsky dishonored Note Receivable No. 8, a 30-day, 12% note, maturity value due today; principal, $250.00; interest, $2.50; total, $252.50. Memorandum No. 120. PrincipalInterest RateFraction of Year=Interest ×× $250.0012% 30 360 =$2.50 ×× 4 2 3 1

7 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 7 LESSON 10-1 RECEIVING CASH FOR A DISHONORED NOTE RECEIVABLE page 294 Maturity Value Interest Rate Fraction of Year = Additional Interest ×× 1.Calculate number of days from maturity date to date of payment. 2.Calculate additional interest income. TimeNumber of Days June 1 through 3029(30 – 1 = 29) July31 August31 September 1 through 3030 Total number of days121days1 $252.5012% 121 360 = $10.18 ×× 2 September 30. Received cash from Ruth Javinsky for dishonored Note Receivable No. 8: maturity value, $252.50, plus additional interest, $10.18; total, $262.68. Receipt No. 201.

8 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 8 LESSON 10-1 3.Record payment of the account receivable. 4.Record additional interest income. 5.Enter total cash received. RECEIVING CASH FOR A DISHONORED NOTE RECEIVABLE page 294 3 4 5

9 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 9 LESSON 10-1 TERMS REVIEW notes receivable dishonored note page 296

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