ACC (102)

ACC (102)
Part(3&4)

MUST - UNI
Account receivable
Account payable

ACC (102)

‫– شعبة انجليزى‬

‫احمد السيد‬ 1

Ahmed Sayed 0100-1580015

0100-1580015
 ACC (102)

Chapter (3) Accounting For Receivables

1) Prepare journal entries to record the following transactions entered into Mohamed Co.
records:
2020:
Feb.1: Lease a building to Amre Co., received L.E.30,000 10% - 5 months note .
June 1: Received a L.E.20,000, 12%, 1-year note from Gamal Co. as full payment of his
account.
July 1: Mohamed Co. received cash settlement of Amre Co. note and its interest.
Oct. 30: Sold merchandise on account to Adel, Co. for L.E.10,500,
Oct. 31: Adel, Co. returned merchandise worth L.E.500.
Nov. 1: Received a N/R 8 months 9% from Adel, Co. as full payment of his account
Dec. 31: Accrued interest on the two notes.
Dec. 31: Closed interest revenue on the three notes.
2021
June 1: Gamal Co. honored his promissory note by sending the face amount plus interest. No
interest has been accrued in 2013.
July 1: Adel inc. paid his note and its interest at maturity date.
Solution

Date TRANSACTION Dr Cr

Feb.1 N/R 30000

Leased building 30000
Nov.1 2020 N/R 20000
A/R 20000
July 1 2020 Cash 31250
Interest revenue 1250
N/R 30000
Oct. 30 2020 A/R 10500
Sales revenue 10500
Oct. 31 2020 Sales return 500
A/R 500
N/R 10000
Nov. 1 2021 A/R 10000

Ahmed Sayed 0100-1580015

 ACC (102)

Dec . 31 2020 Interest revenue 2800

Income summary 2800
Cash 22400
June 1 2021 Interest receivable 1400
Interest revenue 1000
N/R 20000
Cash 10600
July 1 2021 Interest receivable 150
Interest revenue 450
N/R 10000
Dec . 31 2020 Interest revenue 1450
Income summary 1640

Note

$ N/R Issuance date Settlement date

Feb 1 (2020) Jun 1 (2020)
30000 10% 5 month

Feb.1: Lease a building to Amre Co., received L.E.30,000 10% - 5 months note .

𝟓
 2020 (Feb 1 – Jun 1) Interest revenue = 30000 x 10 % x 𝟏𝟐 = 1250

$ N/R
Issuance date Settlement date
20000 12% 1 year Jun 1 (2020) Jun 1 (2021)

June 1: Received a L.E.20, 000, 12%, 1-year note from Gamal Co. as full payment of his account
𝟕
 2020 (Jun 1 – Dec 31) Interest receivable = 20000 x 12 % x 𝟏𝟐 = 1400
𝟓
 2021 (Jan 1 –Jun 1) Interest revenue = 20000 x 12 % x = 1000
𝟏𝟐

$ N/R Issuance date Settlement date

Nov 1 (2020) July 1 (2021)
10000 9% 8 month

Nov. 1: Received a N/R 8 months 9% from Adel, Co. as full payment of his account
10500 – 500 = 10000
𝟐
 2020 (Nov 1 – Dec 31) Interest receivable = 10000 x 9 % x 𝟏𝟐 = 150
𝟔
 2021 (Jan 1 –July 1) Interest revenue = 10000 x 9 % x 𝟏𝟐 = 450

Total interest revenue 2020 = 1250 +1400+ 150 = 2800 (income summary 2020)
Total interest revenue 2021 = 1000+ 450 = 1450 (income summary 2021)
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Ahmed Sayed 0100-1580015

 ACC (102)

2) The following transactions recorded by SOS Corporation:

June, 28: Sold goods to AGC Company for L.E. 44,000 on 4% / 7 days, 30 net.
June, 30: AGC Company returned damaged units worth L.E. 4000.
July, 1: SOS Corporation received half of AGC account in cash, and received a note 8%, 8
months, for the reminder.
Instructions:
1- Journalize the above transactions.
2- Journalize the accrual interest and closing it at 31, Dec.
3- Journalize the collecting of the note and its interest at maturity date.
Solution

Date TRANSACTION Dr Cr

June, 28 A/R 44000

Sales 44000
June, 30 Sales return 4000
A/R 4000
July, 1 Sales return 19200
Sales discount (20000*4%) 800
N/R 20000
A/R 40000
Dec. 31 Interest revenue 800
Income summary 800
Cash 21067
March 1 Interest receivable 800
Collecting Interest revenue 267
N/R 20000
Dec. 31 2020 Interest revenue 267
Income summary 267
Note

$ N/R
Issuance date Settlement date
20000 8% 8 month July 1 (2020) March 1 (2021)

𝟔
 2020 (July 1 – Dec 31) Interest receivable = 20000 x 8 % x 𝟏𝟐 = 800
𝟐
 2021 (Jan 1 –March 1) Interest revenue = 20000 x 8 % x 𝟏𝟐 = 267

Ahmed Sayed 0100-1580015

 ACC (102)

3) The Star Company has the following transactions related to notes receivables during
2020:
May 1: Loaned L.E. 30000 cash to Hassan on a 9 months, 12% note.
Aug. 31: Received a L.E.10,000, 6% - 7 months note from Hassona Co.
Nov.1: Sold goods to Hossen Co. receiving L.E. 15000, three months, 10% note .
Dec.1: Received a L.E. 12,000, 6 months, 9% note in exchange for Hassanen outstanding
accounts receivables.
Dec.31: Accrued interest revenue on the three notes receivables.
Dec.31: Closed the revenues accounts on the four notes.
Required:
a) Journalize all the above transactions in The General Company records.
b) Record the collection of the notes at its maturity dates
Solution

Date TRANSACTION Dr Cr

May 1 N/R 30000

Cash 30000
Aug. 31 N/R 10000
A/R 10000
Nov.1 N/R 15000
Sales 15000
Dec. 1 N/R 12000
A/R 12000
Dec. 31 2020 Interest revenue 2790
Income summary 2790
Cash 15150
Feb 1 2021 Interest receivable 100
Interest revenue 50
N/R 15000
April 1 2021 Cash 32550
Interest receivable 2400
Interest revenue 150
N/R 30000
April 1 2021 Cash 10350
Interest receivable 200
Interest revenue 150
N/R 10000

Ahmed Sayed 0100-1580015

 ACC (102)

Jun 1 2021 Cash 12540

Interest receivable 90
Interest revenue 450
N/R 12000

Dec. 31 2021 Interest revenue 800

Income summary 800

$ N/R Issuance date Settlement date

May 1 (2020) April 1 (2021)
30000 12% 9 month
Note
 May 1: Loaned L.E. 30000 cash to Hassan on a 9 months, 12% note.

𝟖
 2020 (May 1 – Dec 31) Interest receivable = 30000 x 12 % x 𝟏𝟐 = 2400
𝟏
 2021 (Jan 1 –April 1) Interest revenue = 30000 x 12 % x 𝟏𝟐 = 150

$ N/R Issuance date Settlement date

Aug 31 (2020) April 1 (2021)
10000 6% 7 month

 Aug. 31: Received a L.E.10,000, 6% - 7 months note from Hassona Co.

𝟒
 2020 (Aug. 31 – Dec 31) Interest receivable = 10000 x 6 % x 𝟏𝟐 = 200
𝟑
 2021 (Jan 1 –April 1) Interest revenue = 10000 x 6 % x 𝟏𝟐 = 150

$ N/R Issuance date Settlement date

Nov 1 (2020) Feb 1 (2021)
15000 10% 3 month

Nov.1: Sold goods to Hossen Co. receiving L.E. 15000, three months, 10% note .

𝟐
 2020 (Nov 1 – Dec 31) Interest receivable = 15000 x 10 % x 𝟏𝟐 = 100
𝟏
 2021 (Jan 1 –Feb 1) Interest revenue = 15000 x 8 % x 𝟏𝟐 = 50

Ahmed Sayed 0100-1580015

 ACC (102)
$ N/R Issuance date Settlement date
Dec 1 (2020) Jun 1 (2021)
12000 9% 6 month

Dec.1: Received a L.E. 12,000, 6 months, 9% note in exchange for Hassanen outstanding accounts
receivables.

𝟏
 2020 (Dec. 1 – Dec 31) Interest receivable = 12000 x 9 % x 𝟏𝟐 = 90
𝟓
 2021 (Jan 1 –Jun 1) Interest revenue = 12000 x 9 % x 𝟏𝟐 = 450

Total interest revenue 2020 = 2400+200 +100+ 90 = 2790 (income summary 2020)
Total interest revenue 2021 = 150+ 50 +450+150= 800 (income summary 2021)

4) Prepare journal entries to record the following transactions entered by Mohamed

Company:
2020
June 1 Received a L.E.20,000, 12%, 1-year note from Ahmed as full payment of his account.
Nov. 1 Sold merchandise on account to Adel, Co. for L.E.10,500, terms 2% 10 days.
Nov. 5 Adel, Co. returned merchandise worth L.E.500.
Nov. 9 received payment in full from Adel, Co.
Dec. 31Accrued interest on Ahmed's note.
Dec. 31 Closing interest on Ahmed’s note.
2021
June 1 Ahmed honored his promissory note by sending the face amount plus interest.
Solution

Date TRANSACTION Dr Cr

June 1 2020 N/R 20000

A/R 20000
Nov. 1 A/R 10500
Sales 10500
Nov.5 Sales return 500
A/R 500
Nov. 9 Cash 9800
Sales discount 200
A/R 10000
Dec. 31 2020 Interest revenue 1400
Income summary 1400
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Ahmed Sayed 0100-1580015

 ACC (102)

Jun 1 2021 Cash 22400

Interest receivable 1400
Interest revenue 1000
N/R 20000
Dec. 31 2021 Interest revenue 1000
Income summary 1000

Note:
$ N/R
Issuance date Settlement date
20000 7% 1 year Jun 1 (2020) Jun 1 (2021)

June 1 Received a L.E.20,000, 12%, 1-year note from Ahmed as full payment of his account.
𝟕
 2020 (June. 1 – Dec 31) Interest receivable = 20000 x 12 % x 𝟏𝟐 = 1400
𝟓
 2021 (Jan 1 –Jun 1) Interest revenue = 20000 x 12 % x 𝟏𝟐 = 1000

Chapter (4) Current Liabilities and Payroll Accounting

1) On December 1, The Modern Corporation borrowed L.E.12,000 on a three months, 10%

note. Prepare the entries to record the issuance of the note, the accrual and closing of
interest at year end, and the payment of the note and its interest at maturity date.
Solution

$ N/p Issuance date Settlement date

Dec 1 (2020) March 1 (2021)
12000 10% 3 month

𝟏
2020 (Dec 1 – Dec 31) Interest payable = 12000 x 10 % x 𝟏𝟐 = 100
𝟐
2021 (Jan1 – March 1) Interest expense = 12000 x 10% x 𝟏𝟐 = 200

Date TRANSACTION Dr Cr
Dec .1 Cash 12000
Issuance N/P 12000
Dec . 31 2020 Interest expense 100
Accrual Interest payable 100
Dec . 31 of year Income summary 100
Closed entry Interest expense 100

Ahmed Sayed 0100-1580015

 ACC (102)

N/P 12300
March 1 Interest payable 100
Maturity date Interest expense 200
Cash 12300

Dec . 31 of next year Income summary 200

Closed entry Interest expense 200

On December 1, The Star Corporation purchased goods for L.E.5,000 on a three months, 6%
note. Prepare the entries to record the issuance of the note, the accrual of interest and
closing it at year end, and the payment of the note at maturity date.
Solution

$ N/p Issuance date Settlement date

Dec 1 (2020) March 1 (2021)
5000 6% 3 month

𝟏
2020 (Dec 1 – Dec 31) Interest payable = 5000 x 6 % x 𝟏𝟐 = 25
𝟐
2021 (Jan1 – March 1) Interest expense = 5000 x 6% x = 50
𝟏𝟐

Date TRANSACTION Dr Cr
Dec .1 of year Cash 5000
Issuance note N/P 5000
Dec . 31 0f year Interest expense 25
Accrual Interest payable 25
Dec . 31 of year of Income summary 25
Closed entry Interest expense 25

N/P 5000
March 1 of next year Interest payable 25
Maturity date Interest expense 50
Cash 5075
Dec . 31 of next year Income summary 50
Closed entry Interest expense 50

Ahmed Sayed 0100-1580015

 ACC (102)

3) The General Company has the following transactions related to notes during 2020:
May 1: Loaned L.E. 30000 cash to Ahmed Company on a 1-year, 10% note
Nov.1: Sold goods to Mohamed Company receiving L.E. 12000, 3 months, 8% note.
Dec.1,: Borrowed L.E.5,000 on a three months, 6% note payable.
Dec.1: Received a L.E. 8000, 6 months, 9% note in exchange for Mahmoud company
outstanding accounts receivable.
Dec.31: Accrued interest revenue and interest expense.
Dec.31: Closed the interest revenue and interest expense.
Required:
a) Journalize the transactions for General Company.
b) Record the collection or payment of the notes at its maturities dates.
Solution

Date TRANSACTION Dr Cr
May .1 2020 N/R 30000
Cash 30000
Nov.1 2020 N/R 12000
Sales 12000
Dec .1 2020 Cash 5000
N/P 5000
Dec .1 2020 N/R 8000
A/R 8000
Dec .31 2020 Interest receivable 2220
Interest revenue 2220
Dec . 31 2020 Interest expense 25
Interest payable 25
Cash 12240
Feb 1 2021 Interest receivable 160
Interest revenue 80
N/R 12000
N/P 5000
March 1 2021 Interest payable 25
Interest expense 50
Cash 5075
Cash 33000
May 1 2021 Interest receivable 2000
Interest revenue 1000
N/R 30000

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Ahmed Sayed 0100-1580015

 ACC (102)

Cash 8360
Jun 1 2021 Interest receivable 60
Interest revenue 300
N/R 8000
Dec . 31 2020 Interest revenue 2220
Income summary 2220
Dec . 31 2020 Income summary 25
Interest expense 25
Dec . 31 2021 Interest revenue 1380
Income summary 1380
Dec . 31 2021 Income summary 50
Interest expense 50

Interest receivable
$ N/R
Issuance date Settlement date
May 1 (2020) May 1 (2021)
30000 10% 1 year

May 1: Loaned L.E. 30000 cash to Ahmed Company on a 1-year, 10% note

𝟖
2020 (may 1 – Dec 31) Interest receivable = 30000 x 10% x 𝟏𝟐 = 2000
𝟒
2021 (Jan 1-May 1) Interest revenue = 30000 x 10% x 𝟏𝟐 = 1000

$ N/R
Issuance date Settlement date
12000 8% 3 month Nov 1 (2020) Feb 1 (2021)

Nov.1: Sold goods to Mohamed Company receiving L.E. 12000, 3 months, 8% note.

𝟐
2020 (Nov 1 – Dec 31) Interest receivable = 12000 x 8% x 𝟏𝟐 = 160
𝟏
2021 (Jan1 – Feb 1) Interest revenue = 12000 x 8% x 𝟏𝟐 = 80

$ N/R
Issuance date Settlement date
Dec 1 (2020) Jun 1 (2021)
8000 9% 6 month

Dec.1Received a L.E. 8000, 6 months, 9% note in exchange for Mahmoud company outstanding
accounts receivable
𝟏
2020 (Dec 1 – Dec 31) Interest receivable = 8000 x 9% x 𝟏𝟐 = 60
𝟓
2021 (Jan1 – Jun 1) Interest revenue = 8000 x 9% x 𝟏𝟐 = 300

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Ahmed Sayed 0100-1580015

 ACC (102)

Total interest receivable (2020)= 2000+160+60 = 2220

Total interest revenue (2021)= 1000+80+300 = 1380

$ N/p Issuance date Settlement date

Dec 1 (2020) March 1 (2021)
5000 6 % 3 month
Interest payable
Dec.1,: Borrowed L.E.5,000 on a three months, 6% note payable.

𝟏
2020 (Dec 1 – Dec 31) Interest payable = 5000 x 6 % x 𝟏𝟐 = 25
𝟐
2021 (Jan1 – March 1) Interest expense = 5000 x 6% x 𝟏𝟐 = 50

4) Ahmed Company has the following selected accounts after posting adjusting entries:
Accounts Payable L.E. 90,000
Notes Payable, 3-month 160,000
Accumulated Depreciation—Equipment 28,000
Payroll and Benefits Payable 54,000
Notes Payable, 5-year, 8% 60,000
Estimated Warranty Liability 68,000
Payroll Tax Expense 12,000
Interest Payable 6,000
Mortgage Payable 400,000
Sales Tax Payable 32,000
Instructions
(a) Prepare the current liability section of Ahmed Company's balance sheet, assuming
L.E.50,000 of the mortgage is payable next year. (List liabilities in magnitude order, with
largest first.)
(b) Comment on Ahmed’s liquidity, assuming total current assets are L.E.900,000.
Solution

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Ahmed Sayed 0100-1580015

 ACC (102)

A- Current liabilities
Mortgage Payable (400.000—50000) 350,000
Notes Payable, 3-month 160,000
Accounts Payable L.E. 90,000
Payroll and Benefits Payable 54,000
Interest Payable 6,000
Sales Tax Payable 32,000
Total current Liab 628000

B- Liquidity
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝒂𝒔𝒔𝒆𝒕𝒔 𝟗𝟎𝟎𝟎𝟎𝟎
Working capital = Current ratio = = = 0.67
𝒄𝒖𝒓𝒓𝒆𝒏𝒕 𝒍𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔 𝟔𝟐𝟖𝟎𝟎𝟎

Its meaning the company have ability has liquidity or cash to meet its short-term
obligations

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Ahmed Sayed 0100-1580015