Question

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

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

2016 Dec. 16 Accepted a $10,100, 60-day, 8% 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) $7,600, 8%, 90-day note dated this day in granting a time extension on the past-due account receivable from Midnight Co. 17 Accepted a(n) $3,400, 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 8%. Aug. 7 Accepted a(n) $7,300, 90-day, 11% note dated this day in granting a time extension on the past-due account receivable of Mulan Co. Sep. 3 Accepted a(n) $2,360, 60-day, 10% 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.

Required 1A

First, complete the table below to calculate the interest amount at December 31, 2016.

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

Required 1B

Use the calculated value to prepare your journal entries for 2016 transactions.

Journal entry worksheet

Accepted a $10,100, 60-day, 8% note dated this day in granting Danny Todd a time extension on his past-due account receivable.

Note: Enter debits before credits.

Made an adjusting entry to record the accrued interest on the Todd note.

Required 1C

First, complete the table below to calculate the interest amounts.

	Total Through Maturity Midnight Co. Note - March 2, 2017 A. Privet Note - March 17, 2017 Mulan Note - August 7, 2017 Midnight Co. Note - May 31, 2017 N. Carson Note - September 3, 2017 Principal Rate (%) Time

Required 1D

Use those calculated values to prepare your journal entries for 2017 transactions.

Journal entry worksheet

.....

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

2. Accepted a $7,600, 8%, 90-day note dated this day in granting a time extension on the past-due account receivable from Midnight Co.

3. Accepted a $3,400, 30-day, 7% note dated this day in granting Ava Privet a time extension on her past-due account receivable.

4. Privet dishonored her note when presented for payment.

5. 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.

6. Received payment from Midnight Co. for the maturity value of its dishonored note plus interest for 46 days beyond maturity at 8%.

7. Accepted a $7,300, 90-day, 11% note dated this day in granting a time extension on the past-due account receivable of Mulan Co.

8. Accepted a $2,360, 60-day, 10% note dated this day in granting Noah Carson a time extension on his past-due account receivable.

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

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

11. Wrote off the Privet account against Allowance for Doubtful Accounts.

Answer 1

D.Todd note-December 16,2016
		total	interest
		through	recognized
		maturity	31-Dec
Principal		10,100	10,100
Rate(%)		8%	8%
time		60/360	15/360
total interest		135	34
Date	General journal				Debit	credit
2016
16-Dec	Note receivable				10,100
	Account receivable					10,100
31-Dec	interest receivable				34
	interest revenue					34
		Midnight	privet	Mulan	Midnigh	carson
		2-Mar	17-Mar	7-Aug	16-Jul	3-Sep
		2017	2017	2017	2017	2017
Principal		7,600	3,400	7,300	7,752	2,360
Rate(%)		8%	7%	11%	8%	10%
time		90/360	30/360	90/360	46/360	60/360
total interest		152	20	201	79	39

Date	General journal				Debit	credit
2017
14-Feb	Cash				10235
	interest revenue					101
	Note receivable-T Todd					10,100
	interest receivable					34
2-Mar	Note receivable				7,600
	Account receivable-Midnight co					7,600
17-Mar	Note receivable				3,400
	Account receivable-Privet					3,400
16-Apr	Account receivable-privet				3,420
	note receivable					3,400
	interest revenue					20
31-May	Account receivable-Midnight				7,752
	note receivable					7,600
	interest revenue					152
16-Jul	Cash				7,831
	Account receivable-Midnight					7752
	interest revenue					79
7-Aug	Note receivable				7,300
	account receivable-Mulan Co					7,300
3-Sep	Note receivable				2,360
	account receivable-Carson					2,360
2-Nov	cash				2,399
	note receivable					2,360
	interest revenue					39
5-Nov	cash				7,501
	note receivable					7,300
	interest revenue					201
1-Dec	Allowance for Doubtful accounts				3,420
	Account receivable-privet					3,420