Question

The following cases are independent:
Case A On 1 May 20X8, Jain Company sold merchandise to a customer and received a $ 110,000 (face amount), one- year, non- interest- bearing note. The going ( i. e., market) rate of interest is 6%. Discounting must be used to value the transaction. The annual reporting period for Jain Company ends on 31 December. The customer paid the note in full on its maturity date.
Case B On 15 April 20X8, Hall Company sold merchandise to a customer for $ 175,000, terms 2/ 10, n/ 30. The sale is recorded gross, at $ 175,000. Because of nonpayment by the customer, Hall agreed to accept a $ 175,000, 5%, 12- month note on 1 May 20X8 to replace the account receivable. This is a market interest rate. The annual reporting period ends 30 September. The customer paid the note in full on its maturity date.

Required:
For each case:
1. Give all entries related to the notes receivable through to maturity. Use the gross method to account for accounts and notes receivable.
2. List the items and amounts that will be reported on the 20X8 statement of comprehensive income and statement of financial position.



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  • CreatedFebruary 17, 2015
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