Lesson Plan 2.2 – Accounting for Notes Receivable
Course Title: Accounting II
Lesson Title: Accounting for Notes Receivable
Specific Objective:
Understand the need for notes receivable. Learn the proper accounting
procedure for handling notes receivable transactions.
TEKS: 130.167.c.2:
G – complete a work sheet for a corporation;
J – produce a balance sheet for a corporation;
K – formulate a cash flow statement.
TAKS: R1, M1, M10
Performance Objectives:
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Explain why a business uses negotiable instruments;
Determine a Promissory Note’s maturity date;
Calculate a Promissory Note’s interest and maturity value;
Determine the bank discount on a discounted note;
Journalize entries for notes receivable;
Identify accounting concepts and practices related to unearned revenue and
accrued revenue;
Journalize adjusting and reversing entries for unearned revenue initially
recorded as revenue;
Journalize adjusting and reversing entries for accrued revenue;
Define accounting terms related to the lesson.
Preparation
Materials and Equipment Checklist:
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Overhead projector
Glencoe’s Textbook, Chapter 4, pp. 114-135, and Demonstration Problems
Century 21’s Textbook, Chapter 10, pp. 276-289.
Accounting software and spreadsheet software.
Teaching Strategies:
Demonstrate problems from textbooks.
Sponge/Focus Activity:
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Exploring the Real World of Business, p. 114 from Glencoe’s Textbook.
Discuss why a business might extend the time for payment from a customer.
Evaluate “90-day same as cash” plans some businesses offer.
o What do they mean?
o What are the repayment terms if the loan is not paid in 90 days?
Lesson Content:
See Glencoe’s Textbook, Chapter 4, pp 114-135, or Century 21’s Textbook,
Lesson Plan 2.2 – Accounting for Notes Receivable
Copyright
© Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II
Chapter 10, pp. 276-289. Here is an outline:
I.
II.
III.
Negotiable Instruments
a. Promissory Notes
1.
Determining a note’s maturity date
2.
Calculating interest on a note
3.
Calculating interest using an interest table
Notes Receivable
a. Recording the receipt of a note receivable
b. Recording the receipt of cash for a note receivable
c. Dishonored notes receivable
Discounting notes receivable
a. Discounted Notes
1.
Contingent liability
2.
Recording discounted notes receivable
3.
Recording the removal of paid discounted notes receivable
4.
Dishonor of discounted notes receivable.
b. The Accrual Basis of Accounting
1.
Adjusting for accrued interest
2.
Receiving payment for accrued interest
c. Drafts and Trade Acceptances
Assessment:
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For problems you can use Peachtree Accounting from Glencoe, Glencoe
Accounting Software, Century 21 Accounting Software, or a spreadsheet.
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From Glencoe’s Textbook Problems
o Guided Practice
 4-1 Determining a Note’s Maturity Date, Interest, and Maturity
Value, p 120
 4-2 Recording Note Transactions, p. 125
 4-3 Analyzing a Source Document, p. 125
 4-4 Note Computations, p. 134
o Independent Practice
 4-5 Spreadsheet Problem: Notes Receivable Computations,
p. 139
 4-6 Recording the Issuance and Collection of a Note
Receivable, p. 139-140
 4-7 Recording Dishonored Notes Receivable, p. 140
 4-8 Discounting a Note Receivable, p. 140-141
 4-9 Recording a Dishonored Discounted Note Receivable,
p. 141
o Additional Activities: Using Key Terms, Understanding Accounting
Concepts and Procedures, Case Study, Conducting an Audit with Alex,
Internet Connection, and Workplace Skills, pp. 136-137
From Century 21’s Textbook
o Guided Practice
 Work Together: Journalizing Notes Receivable Transactions,
p. 282
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Lesson Plan 2.2 – Accounting for Notes Receivable
Copyright
© Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II

On Your Own: Journalizing Notes Receivable Transactions,
p. 282
 Work Together: Journalizing adjusting and reversing entries for
unearned revenue initially recorded as revenue and for accrued
revenue, p. 287
 On Your Own: Journalizing adjusting and reversing entries for
unearned revenue initially recorded as revenue and for accrued
revenue, p. 288
o Independent Practice
 10-1 Journalizing transactions for notes receivable, p. 290
 10-2 Journalizing adjusting and reversing entries for unearned
revenue initially recorded as revenue, p. 290
 10-3 Journalizing adjusting and reversing entries for accrued
revenue, p. 290
 10-4 Journalizing notes receivable, unearned revenue, and
accrued revenue initially recorded as revenue transactions
 10-5 Journalizing accounts and notes receivable, p. 291-292
o Additional Activities: Applied Communication and Cases for Critical
Thinking, p. 292
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This lesson is also assessed through the Unit Test at the end of the Unit.
Additional Resources:
Textbooks:
Guerrieri, Donald J., F. Barry Haber, William B. Hoyt, and Robert E. Turner,
Glencoe Accounting Real-World Applications & Connections, Advanced
Course, Fourth Edition, Glencoe McGraw-Hill: New York, New York.
Ross, Kenton E., CPA, Mark W. Lehman, CPA, Claudia Bienias Gilbertson, CPA,
Robert D. Hanson, Century 21 Accounting Advanced, Anniversary Edition,
Thomson South-Western: Mason, OH, 2003.
Multimedia:
Century 21’s Teacher’s Resource CD
Websites:
http://accounting.swpco.com
Lesson Plan 2.2 – Accounting for Notes Receivable
Copyright
© Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II