Marydale Products permits its customers to defer payment by giving personal notes instead of cash. All the
Question:
Marydale Products permits its customers to defer payment by giving personal notes instead of cash. All the notes bear interest and require the customer to pay the entire note in a single payment six months after issuance. Consider the following transactions, which describe Marydale's experience with two such notes:
a. On October 31, Marydale accepts a six-month, 12 percent note from customer A in lieu of a $3,600 cash payment for merchandise delivered on that day.
b. On February 28, Marydale accepts a six-month, $2,400, 12 percent note from customer B in lieu of a $2,400 cash payment for merchandise delivered on that day.
c. On April 30, customer A pays the entire note plus interest in cash.
d. On August 31, customer B pays the entire note plus interest in cash.
Required:
Prepare the necessary journal and adjusting entries required to record transactions a through d in Marydale's records.
Step by Step Answer:
Cornerstones of Financial and Managerial Accounting
ISBN: 978-0324787351
1st Edition
Authors: Rich Jones, Mowen, Hansen, Heitger