Q1.

Journalize the following transactions:

July 8 Received a $180,000, 90-day 8% note dated July 8 from Miracle Chemical on account.
Oct. 6 The note is dishonored by Miracle Chemical.
Nov. 5 Received the amount due on the dishonored note plus interest for 30 days at 10% on the total amount
charged to Miracle Chemical on Oct. 6.
Q2.

The following selected transactions were completed by Easy-Zip Co., a supplier of zippers for clothing:
2013
Dec. 16. Received from ABC Co., on account, a $30,000, 60-day, 12% note dated December 21.
31. Recorded an adjusting entry for accrued interest on the note of December 21.
31. Recorded the closing entry for interest revenue. 2014
Feb 19. Received payment of note and interest from ABC Co.
Journalize the entries to record the transactions.

Q3. For two recent fiscal years, XYZ reported the following (in millions):

Year 2 Year 1
Net sales $65,225 $42,905
Accounts receivable at end of year 5,510 3,361
Assume that the accounts receivable (in millions) were $2,422 at the beginning of fiscal Year 1.
1. Compute the accounts receivable turnover for Year 2 and Year 1. Round to one decimal place.
2. Compute the days’ sales in receivables at the end of Year 2 and Year 1. Round to one decimal place.
3. What conclusions can be drawn from (1) and (2) regarding Apple’s efficiency in collecting receivables?

Q4.

ABC made the following expenditures on one of its delivery trucks:

May 15. Paid $1,500 for installation of a hydraulic lift.
July 11. Replaced the transmission at a cost of $2,000, which extends its useful life by eight years.
Nov. 20. Paid $100 to change the oil and air filter.
Prepare journal entries for each expenditure.
Q1. 25% = 5, 10, 10
July 8 Notes Receivable 180,000
Accounts Receivable—Miracle Chemical Company 180,000
Oct. 6 Accounts Receivable— Miracle Chemical Company 183,600
Notes Receivable 180,000
Interest Revenue 3,600
Nov. 5 Cash 185,130
Accounts Receivable— Miracle Chemical
Company 183,600
Interest Revenue 1,530*
*$183,600  0.10  30/360 = $1,530
Q2. 25% = 5, 5, 5, 10%
2024
Dec. 21 Notes Receivable 30,000
Accounts Receivable—Lake Shore Clothing & Bags Co. 30,000
31 Interest Receivable 100
Interest Revenue 100
Accrued interest($30,000 × 0.12 × 10/360 = $100).
31 Interest Revenue 100
Income Summary 100
2025
Mar. 16 Cash 30,600
Notes Receivable 30,000
Interest Receivable 100
Interest Revenue 500
Q3. 10, 10, 5%
1. Year 2: 14.7 {$65,225 ÷ [($5,510 + $3,361) ÷ 2]}
Year 1: 14.8 {$42,905 ÷ [($3,361 + $2,422) ÷ 2]}
2. Year 2: 24.8 days [($5,510 + $3,361) ÷ 2] = $4,435.5; [$4,435.5 ÷ ($65,225 ÷ 365)]
Year 1: 24.6 days [($3,361 + $2,422) ÷ 2] = $2,891.5; [$2,891.5 ÷ ($42,905 ÷ 365)]
3. The accounts receivable turnover indicates a slight decrease in the efficiency of
collecting accounts receivable by decreasing from 14.8 to 14.7, an unfavorable trend.
The days’ sales in receivables increased from 24.6 days to 24.8, an unfavorable trend.
Before reaching a more definitive conclusion, the ratios should be compared with
industry averages and similar firms.

Q4. 8, 9, 8%
May. 15 Delivery Truck 1,500
Cash 1,500

July 11 Accumulated Depreciation—Delivery Truck 2,000

Cash 2,000

Nov. 20 Repairs and Maintenance Expense 100

Cash 100