Question

Problem 7-9 (Comprehensive Receivables Problem) Braddock Inc. had the following long-term receivable account balances atDecember 31, 2016.Note receivable from sale of division $1,500,000Note receivable from officer 400,000Transactions during 2017 and other information relating to Braddock’s long-term receivables were as follows.1.The $1,500,000 note receivable is dated May 1, 2016, bears interest at 9%, and represents the balance of the considerationreceived from the sale of Braddock’s electronics division to New York Company. Principal payments of $500,000 plus appropriateinterest are due on May 1, 2017, 2018, and 2019. The first principal and interest payment was made on May 1,2017. Collection of the note installments is reasonably assured.2.The $400,000 note receivable is dated December 31, 2016, bears interest at 8%, and is due on December 31, 2019. The noteis due from Sean May, president of Braddock Inc. and is collateralized by 10,000 shares of Braddock’s common stock. Interestis payable annually on December 31, and all interest payments were paid on their due dates through December 31,2017. The quoted market price of Braddock’s common stock was $45 per share on December 31, 2017.Instructionsa)Show the balance sheet items that are related to the above two notereceivables for 2016 and 2017.

Answer 1

The balance sheet items that are related to the above two notereceivables for 2016 and 2017 are as below

a. The  Long term receivables section on balance sheet   

BRADDOCK INC.

Long term receivables section on balance sheet December 31,2016

Particulars	Amount(in $)
9% Note receivable from sale of division due in annual installment of $500,000 in 2018 and 2019, less current installment	1,000,000
8% note receivable from officer , due in 2019, collateralized by 10,000 shares of Braddock’s common stock @$45 each.	400,000
Total long term receivables	1,400,000

BRADDOCK INC.

Long term receivables section on balance sheet December 31,2017

Particulars	Amount(in $)
9% Note receivable from sale of division due in annual installment of $500,000 in 2019, less current installment	500,000
8% note receivable from officer , due in 2019, collateralized by 10,000 shares of Braddock’s common stock @$45 each.	400,000
Total long term receivables	900,000

b. Current portion Long term receivables

Particulars	2016	2017
Note receivable from sale divison	500,000	500,000
Total current portion of long term receivable	500,000	500,00

c. Accrued Interest receivable:

Particulars	2016	2017
Note receivable from sale divison	90,000	60,000
	(1,500,000*9%*8/12)	(1,000,000*9%*8/12)
Total accrued interest	90,000	60,000