Question

i want deep explanation of each one, first explain the question step by step then move forward. example in Dec1, first explain to me the context of the question as I am confused about the word” doshonest” what does it mean exactly in bussiness, then why the three accounts are invloved and why they are involved and why ther are debit or credit.

i need to know the way to deal with this questions

i attached the correct solution but i do not know the reason?

Dec. 1: Ying Yang Music dishonored its note at maturity. (Prepare a single compound journal entry.) Date Accounts Debit Credit 2019 Dec. 1 Accounts Receivable-Ying Yang Music 5,082 Note Receivable-Ying Yang Music 5,000 Interest Revenue 82 Dec. 1: Wrote off the receivable associated with Ying Yang Music. Use the allowance method.) Date Accounts Debit Credit 2019 Dec. 1 Allowance for Bad Debts 5,082 Accounts Receivable-Ying Yang Music 5,082 Dec. 30. Collected the maturity value of the MM Music note. (Prepare a single compound journal entry.) Date Accounts Debit Credit 2019 Dec 30 Cash 13,650 Note Receivable-MM Music 13.000 Interest Revenue 650

Answer 1

Dec 1: Ying Yang music dishonored its note at maturity

Date	Accounts	Debit	Credit
Dec-01	Accounts Receivable-Ying Yang music	5082
	Note Receivable-Ying Yang music		5000
	Interest Revenue		82

In this case, Note is Dishonored.

Dishonored means , at maturity Ying Yang music fails to pay money for its Notes payable.

Note Receivable is Asset for our company, Hence after dishonor this notes Receivable should be credited (5000)

Interest Revenue is income for company. Income should be credited. Hence Interest upto Dec 1 should be credited (82)

Now We have receivable (5000 + 82) = 5082 from Ying Yang. Hence we need to Debit Ying Yang by 5082

Dec1: Wrote off the receivables associated with Ying Yang music.

Date	Accounts	Debit	Credit
Dec-01	Allowance for Bad Debts	5082
	Accounts Receivable-Ying Yang music		5082

In this case, We need to wrote off the receivables.

Wrote off means, a cancellation from an account of a bad debt or worthless asset.

Now, we have no receivable from Ying Yang, Hence we need to Credit Accounts Receivable.

This wrote off is loss for our company, Hence we need to record loss by Debiting Allowance for Bad Debts

Dec 30: Collected the maturity value of the MM Music note

Date	Accounts	Debit	Credit
Dec-30	Cash	13650
	Note Receivable-MM Music		13000
	Interest Revenue		650

In this case, Note Recevable- MM Music has matured and we receive the cash for it.

Note receivable is asset for company, Hence after maturity asset should be canceled by Credit Notes Receivable (13000)

Interest Revenue is income for company. Income should be credited. Hence Interest upto Dec 30 should be credited (650)

Total cash received by company (13000 + 650) = 13650.

Hence we need to Debit Cash by 13650