What is a Mortgage Note?

What is a Mortgage Note?

• A written promise to pay a stated amount of money at one or more specified future dates.
• Secured by the pledging of certain assets, usually real estate, as collateral.
• Generally requires periodic (monthly/quarterly) payments of principal plus interest.

Accounting Examples Related to Mortgage Notes and other Note Receivables:

Journal Entry Note Receivable
Note Receivable Interest Revenue
Journal Entries

Adjusting Journal Entry for Note Receivable

Warranty Liabilities

Warranty liabilities arise when a seller agrees to fix a product (or service) that fails to perform as expected within a specified period. To ensure conformity and compliance with the matching principle, the seller reports expected the warranty expense in the period when revenue from the sale is reported.

At the end of the accounting period, the company will show an existing liability for the warranty costs it estimates to make in future years to customers it has sold products. Supplies and labor required to honor this service agreement are recorded when service is provided to a customer. The accountant would not try to go back and correct this estimate if it proves to be wrong instead the accountant merely watches the estimates and actual service costs and adjusts future estimates accordingly.

Example Estimated Warranty Liability Problem:

During 2004, A Small Business Hardware company introduces a new product carrying a two-year warrranty. The estimated warranty costs are 4% of dollar sales. Sales and actual warranty expenditures for the years ended December 31, 2004 and 2005 follows:

Sales Actual Warranty expense
2004 $ 800,000 $21,000
2005 $ 1,000,000 $31,000



Set up a T-account for Estimated Warranty Liability:


EWL
-------------------
24000 | 32000
30000 | 40000
--------------------
| 18000

The 24000 and 30000 are the actual amount of money that the hardware company used to repair the stuff and the 32000 and 40000 are found by multiplying the 4% by the sales for that year, which is the Estimated warranty liability, or the amount of money the hardware company estimates that it will need to repair the hardware product. So the company is subtracting the "actual" money used for the amount of money the company estimated it would use.

Additional Accounting Examples:

How to Calculate Net Income

Fiscal Year Definition and Example

Journal Entries for Employee Payroll Deductions
Adjusting Journal Entry Note Receivable
Direct Write off Method Journal Entry
Journalizing Accounting Transactions

Operating Rent Expense and Journal Entries

Credit Sales and Purchases

Accounting Question 1. Happy Company’s Accounts Receivable showed a normal balance of $46,300 on January 1, and $51,500 on January 31. During the month of January, they collected $78,300 from their credit customers in sales. What was the total credit sales for Happy in January?

Accounting Question 2. Happy Company’s Accounts Payable showed a (normal) balance of $76,300 on January 1, and $71,800 on January 31. During the month of January, they paid $82,900 to their suppliers. What was the total credit purchase for Happy in January?

Accounting Question 3. Happy Company’ Trial Balance on their accounting records as of December 31, 2005 reported the following accounts with their normal balances

B

Unearned Fees	$3,100		Common Stock	$ 103,000
Interest Expense	2,400		Building	69,800
Office Equipment	20,800		Prepaid Insurance	3,200
Office Supplies	2,600		Dividends	1,500
Retained earnings	1,600		Utilities Expense	?

What is Utilities Expense?




1. $83,500
2. $78,400
3. $7,400

Additional Links to Accounting Problems and Examples:

Accumulated Depreciation Balance Sheet

Revenue Recognition Principle
How to Calculate Net Income

Percent of Sales Method to Calculate Debt Expense

Calculating the Percent of Accounts Receivable Method for Estimating Bad Debts Expense
Accounting Financial Statements
Credit Sales and Purchases Accounting Problems

Journal Entries

Journal Entries

A Small Business Consulting Company provided consulting service to a business client on January 1, and then billed them for $10,000. Later on February 1, the client made one cash payment of $3,000 and signed a promissory note for $7,000 to settle the account. What is the Small Business Consulting Company's journal entry on February 1?

When the company bills a company, that implies Accounts Receivable for 10000. On feb 1, a particular client made a cash payment of 3000 the journal entry for the Small Business Consulting company would be:

Debit CASH 3000
Credit Accounts Receivable

But, of the 10000 to 'receive' only 3000 were received and the rest (7000) were settled with th note receivable (signing of the note receivable transfers the amount in accounts receivable account to the notes payable account) Therefore, the difference between the amount to receive and the actual amount received (10000-3000 = 7000) is debited to notes receivable account.


Debit Cash 3000
Debit Notes Receivable. 7000
Credit Accounts Receivable 10000

Here is another example of an accounting journal entry:



Additional Accounting Examples:

Journal Entries for Employee Payroll Deductions
Adjusting Journal Entry Note Receivable
Direct Write off Method Journal Entry
Journalizing Accounting Transactions

Operating Rent Expense and Journal Entries

External Links:

Debits and Credits Practice Worksheet

Accounting Journal Entries

Welcome!

This blog is intended to be a free online accounting tutorial.It will provide problems on a range of topics including the accounting equation, credit and debits, computing owner equity, payroll expenses, cvp analysis, interest revenue, cash flows, and cost accounting. As time progresses, there will be many accounting exams and quizzes available for viewing. Questions will be mathematical and conceptual covering accounting terms and topics.