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 1 year ago

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