Journal Entry For Dishonored Note

Dishonored Notes

Notes receivable not collected at maturity areastward considered dishonored notes.

Dishonored notes are reclassified from notes receivable to accounts receivable because when

dishonored they become an ordinary merits.

• The amount transferred to accounts receivable is the maturity value of the note plus any

straight costs attributable to the dishonor.

Following the dishonor, the receivable is assessed for impairment. Illustration: ABC Co. received

a P150,000, threescore-day, 15% note receivable. At maturity dateast, the maker fails to pay. ABC Co. uses

360 days per year in computing for interests.

The journal entry at maturity date idue south equally followsouth: 150k + (150k x 15% x 60/360) = 150k + 3,vii50 =

153,750 Maturity Accounts receivable 153,750 appointment Notes receivable 150,000 Interest

receivable iii,750

Discounting of Own Notation

When an entity borrows money from a bank and discounts its own annotation not a note from

another party such transaction is business relationshiped for every bit a regular loan transaction.

Discounting here means that the bank deducted in advance the interest on the loan. The loan

proceeds released to the borrower is equal to the chief less the interest deducted in

accelerate. Illustration: On July 1, 20X1, ABC Co. discounted its ain note of P1,000,000 to a bank

at 12% for 1 year. The entry to record the discounting of ain note is as follows: The

"Discount on none payable" is a contra-liability account (deduction) to the note payable.

Journal Entry For Dishonored Note,

Source: https://www.studocu.com/ph/document/de-la-salle-college-of-saint-benilde/bs-accountancy/dishonored-notes/16544860