tailieunhanh - Lecture College accounting (13/e): Chapter 16 - Price, Haddock, Farina

Chapter 16 - Notes payable and notes receivable. After reading this chapter, you should be able to: Determine whether an instrument meets all the requirements of negotiability, calculate the interest on a note, determine the maturity date of a note, record routine notes payable transactions, record discounted notes payable transactions, record routine notes receivable transactions. | 1- McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Notes Payable and Notes Receivable Section 1: Accounting for Notes Payable Chapter 16 Section Objectives Determine whether an instrument meets all the requirements of negotiability. Calculate the interest on a note. Determine the maturity date of a note. Record routine notes payable transactions. 5. Record discounted notes payable transactions. UCC Requirements for Negotiability Must be in writing and signed by the maker. Must contain an unconditional promise to pay a definite amount of money. Must be payable either on demand or at a future time that is fixed or that can be determined. Must be payable to the order of a specific person or to the bearer. Must clearly name or identify the drawee if addressed to a drawee. Determine whether an instrument meets all the requirements for negotiability Objective 1 Interest = Principal x Rate x Time Amount being borrowed (also . | 1- McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Notes Payable and Notes Receivable Section 1: Accounting for Notes Payable Chapter 16 Section Objectives Determine whether an instrument meets all the requirements of negotiability. Calculate the interest on a note. Determine the maturity date of a note. Record routine notes payable transactions. 5. Record discounted notes payable transactions. UCC Requirements for Negotiability Must be in writing and signed by the maker. Must contain an unconditional promise to pay a definite amount of money. Must be payable either on demand or at a future time that is fixed or that can be determined. Must be payable to the order of a specific person or to the bearer. Must clearly name or identify the drawee if addressed to a drawee. Determine whether an instrument meets all the requirements for negotiability Objective 1 Interest = Principal x Rate x Time Amount being borrowed (also called face value) Indicated in fractions of a year Calculating Interest on a note Principal x Rate x Time = Interest $4,000 x x (90/360) = $80 Determine the number of days remaining in the month of issue. Determine the number of days in each full month of the note. Determine the number of days in the last month of the note. Add the days together to confirm that they equal the period of the note. Calculating the Maturity Date of a Note Principal + Interest = Maturity Value $4,000 + $80 = $4,080 Notes Payable Transactions 2013 May. 18 Store Equipment 4, Notes Payable—Trade 4, Issued note payable to Unfinished Furniture, Inc., for purchase of store equipment Record the issuance of a note payable Record routine notes payable transactions Objective 4 2013 Aug 16 Notes Payable—Trade 4, Interest Expense Cash 4, Payment of May 18 note to Unfinished Furniture, Inc., Record payment of the note payable and interest: Interest rate is 8%, term of note is 90 .