Question

  

2016

Dec.		16		Accepted a $14,500, 60-day, 7% note dated this day in granting Danny Todd a time extension on his past-due account receivable.
		31		Made an adjusting entry to record the accrued interest on the Todd note.

2017

Feb.		14		Received Todd’s payment of principal and interest on the note dated December 16.
Mar.		2		Accepted a(n) $6,200, 7%, 90-day note dated this day in granting a time extension on the past-due account receivable from Midnight Co.
		17		Accepted a(n) $3,000, 30-day, 7% note dated this day in granting Ava Privet a time extension on her past-due account receivable.
Apr.		16		Privet dishonored her note when presented for payment.
May		31		Midnight Co. refused to pay the note that was due to Ohlm Co. on May 31. Prepare the journal entry to charge the dishonored note plus accrued interest to Midnight Co.'s accounts receivable.
July		16		Received payment from Midnight Co. for the maturity value of its dishonored note plus interest for 46 days beyond maturity at 7%.
Aug.		7		Accepted a(n) $8,150, 90-day, 9% note dated this day in granting a time extension on the past-due account receivable of Mulan Co.
Sep.		3		Accepted a(n) $3,610, 60-day, 12% note dated this day in granting Noah Carson a time extension on his past-due account receivable.
Nov.		2		Received payment of principal plus interest from Carson for the September 3 note.
Nov.		5		Received payment of principal plus interest from Mulan for the August 7 note.
Dec.		1		Wrote off the Privet account against the Allowance for Doubtful Accounts.

Required:
1-a. First, complete the table below to calculate the interest amount at December 31, 2016.
1-b. Use the calculated value to prepare your journal entries for 2016 transactions.
1-c. First, complete the table below to calculate the interest amounts.
1-d. Use those calculated values to prepare your journal entries for 2017 transactions.

The journal entries for 1 d are listed below:

Received Todd’s payment of principal and interest on the note dated December 16.

Accepted a $6,200, 7%, 90-day note dated this day in granting a time extension on the past-due account receivable from Midnight Co.

Accepted a $3,000, 30-day, 7% note dated this day in granting Ava Privet a time extension on her past-due account receivable.

Privet dishonored her note when presented for payment.

Midnight Co. refused to pay the note that was due to Ohlm Co. on May 31. Prepare the journal entry to charge the dishonored note plus accrued interest to Midnight Co.’s accounts receivable.

Received payment from Midnight Co. for the maturity value of its dishonored note plus interest for 46 days beyond maturity at 7%.

Accepted a $8,150, 90-day, 9% note dated this day in granting a time extension on the past-due account receivable of Mulan Co.

Accepted a $3,610, 60-day, 12% note dated this day in granting Noah Carson a time extension on his past-due account receivable.

Received payment of principal plus interest from Carson for the September 3 note.

Received payment of principal plus interest from Mulan for the August 7 note.

Wrote off the Privet account against Allowance for Doubtful Accounts.

  

Answer 1

Date	Particulars	Debit	Credit
16-Dec	Notes Receivable	14500
	To Accounts Receivable		14500
31-Dec	Interest Receivable	42
	To Interest revenue		42	(14500x7%x15/360)
14-Feb	cash	14669
	To Interest Receivable		42
	To Interest Revnue		127	(14500x7%x45/360)
	To Notes Receivable		14500
02-Mar	Notes Receivable	6200
	To Accounts Receivable		6200
17-Mar	Notes Receivable	3000
	To Accounts Receivable		3000
16-Apr	Accounts Receivable	3018
	To Interest Revenue		18	(3000x 7%x30/360)
	To Note Receivable		3000
31-May	Accounts Receivable	6309
	To Interest Revenue		109	(6200x7%x90/360)
	To Notes Receivable		6200
16-Jul	cash	6364
	To Interest Revenue		55	(6309x7%x45/360)
	To accounts Receivable		6309
07-Aug	Notes Receivable	8150
	To Accounts Receivable		8150
03-Sep	Notes Receivable	3610
	To Accounts Receivable		3610
02-Nov	cash
	To Interest Revenue	3682	72	(3610x12%x60/360)
	To Notes Receivable		3610
05-Nov	cash	8333
	To Interest Revenue		183	(8150x9%x90/360)
	To Notes Receivable		8150
01-Dec	Allowance for Doubtful Debt	3018
	To Account Receivable		3018