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Problem 9-5A Analyzing and journalizing notes receivable transactions LO C2, C3, P4 The following transactions are...

Problem 9-5A Analyzing and journalizing notes receivable transactions LO C2, C3, P4

The following transactions are from Ohlm Company. (Use 360 days a year.)

Year 1

Dec. 16 Accepted a $14,600, 60-day, 9% note 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.


Year 2

Feb. 14 Received Todd’s payment of principal and interest on the note dated December 16.
Mar. 2 Accepted a(n) $7,300, 9%, 90-day note in granting a time extension on the past-due account receivable from Midnight Co.
17 Accepted a(n) $3,900, 30-day, 7% note in granting Ava Privet a time extension on her past-due account receivable.
Apr. 16 Privet dishonored her note.
May 31 Midnight Co. dishonored its note.
Aug. 7 Accepted a(n) $8,450, 90-day, 8% note in granting a time extension on the past-due account receivable of Mulan Co.
Sep. 3 Accepted a(n) $2,410, 60-day, 9% note 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, Year 1.
1-b. Use the calculated value to prepare your journal entries for Year 1 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 Year 2 transactions.
2. If Ohlm pledged its receivables as security for a loan from the bank, where on the financial statements does it disclose this pledge of receivables?

Solutions

Expert Solution

D.Todd note-December 16,2012
total interest
through recognized
maturity 31-Dec
Principal 14,600 14,600
Rate(%) 9% 9%
time 60/360 15/360
total interest 219 55
Date General journal Debit credit
2016
16-Dec Note receivable 14,600
Account receivable 14,600
31-Dec interest receivable 55
interest revenue 55
Midnight privet Mulan carson
2-Mar 17-Mar 7-Aug 3-Sep
2018 2018 2018 2018
Principal 7,300 3,900 8,450 2,410
Rate(%) 9% 7% 8% 9%
time 90/360 30/360 90/360 60/360
total interest 164 23 169 36
Date General journal Debit credit
2017
14-Feb Cash 14819
interest revenue 164
Note receivable-T Todd 14,600
interest receivable 55
2-Mar Note receivable 7,300
Account receivable-Midnight co 7,300
17-Mar Note receivable 3,900
Account receivable-Privet 3,900
16-Apr Account receivable-privet 3,923
note receivable 3,900
interest revenue 23
31-May Account receivable-Midnight 7,464
note receivable 7,300
interest revenue 164
7-Aug Note receivable 8,450
account receivable-Mulan Co 8,450
3-Sep Note receivable 2,410
account receivable-Carson 2,410
2-Nov cash 2,446
note receivable 2,410
interest revenue 36
5-Nov cash 8,619
note receivable 8,450
interest revenue 169
1-Dec Allowance for Doubtful accounts 3,923
Account receivable-privet 3,923
pledge- Disclosure of the arrangement in notes to the financial statement

ekkarill92 answered 2 years ago
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