Question

Following are selected transactions of Danica Company for 2016. Dec. 13 Accepted a $19,000, 45-day, 6% note dated December 13 in granting Miranda Lee a time extension on her past-due account receivable. 31 Prepared an adjusting entry to record the accrued interest on the Lee note. Complete the table to calculate the interest amounts at December 31st and use the calculated value to prepare your journal entries. (Do not round your intermediate calculations. Use 360 days a year.)

Complete the table to calculate the interest amounts at December 31^st.

	Interest Total Through Recognized Maturity December 31 Principal Rate (%) Time Total interest

Record acceptance of a $19,000, 45-day, 6% note dated December 13 in granting Miranda Lee a time extension on her past-due account receivable.

Prepare an adjusting entry to record the accrued interest on the Lee note.

Answer 1

M Lee Note
Complete the table to calculate the interest amount :
	Total through maturity	Amount accrued at dec.31	Interest recognized jan.27
Principal	$                        19,000.00	$                               19,000.00	$                               19,000.00
Rate(%)	6%	6%	6%
Time	45/360	18/360	27/360
Total interest	$                              142.50	$                                       57.00	$                                        85.50
	(19000*45/360*6%)	(19000*18/360*6%)	(19000*6%*27/360)
* Interest is apportioned between the Accrued date at the year end for 18 days and recognized for remaining 27 days at the end of 45 day period
Date	particulars	Debit	Credit
27.jan.2018	Cash	$                               19,142.50
	To interest revenue		$                                        85.50
	To interest receivable		$                                        57.00
	To Notes receivable - M.lee		$                               19,000.00
	(To record adjusting entry on accrued interest)