Question

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

2016

Dec.		16		Accepted a $10,800, 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 $6,100, 8%, 90-day note dated this day in granting a time extension on the past-due account receivable from Midnight Co.
		17		Accepted a $2,400, 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 $7,450, 90-day, 10% note dated this day in granting a time extension on the past-due account receivable of Mulan Co.
Sep.		3		Accepted a $2,100, 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.

1-a. 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

1-b. Accepted a $10,800, 60-day, 8% note dated this day in granting Danny Todd a time extension on his past-due account receivable.

	Date General Journal Debit Credit Dec 16

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

	Date General Journal Debit Credit Dec 31

1-c.

	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 Total interest

1-d. Journal entries for the following:

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

-Accepted a $6,100, 8%, 90-day note dated this day in granting a time extension on the past-due account receivable from Midnight Co.

-Accepted a $2,400, 30-day, 7% note dated this day in granting Ava Privet a time extension on her past-due account receivable.

-Privet dishonored her note when presented for payment.

-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.

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

-Accepted a $7,450, 90-day, 10% note dated this day in granting a time extension on the past-due account receivable of Mulan Co.

-Accepted a $2,100, 60-day, 10% note dated this day in granting Noah Carson a time extension on his past-due account receivable.

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

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

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

Answer 1

1-a.				Total through maturity	Interest recognized Dec 31.
	Principal			10800	10800
	Rate (%)			8%	8%
	Time			60/360	15/360
	Total interest			144	36
1-b.	Date	Account tiltes and explanation			Debit	Credit
	Dec 16.	Notes receivable-Todd			10800
		Accounts receivable-Todd				10800
		(Accepted a note for time extension
		on his past due accounts receivable)
	Dec 31.	Interest receivable			36
		Interest revenue				36
		(Interest revenue accrued)
1-c.				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			6100	2400	7450	6222	2100
							(6100+122)
	Rate (%)			8%	7%	10%	8%	10%
	Time			90/360	30/360	90/360	46/360	60/360
	Total interest			122	14	186.25	63.60	35
1-d.	Date	Account tiltes and explanation			Debit	Credit
	Feb 14.	Cash			10944
		Interest revenue		(144-36)		108
		Interest receivable				36
		Notes receivable-Todd				10800
		(Received Todd’s payment of principal and interest)
	Mar 2.	Notes receivable-Midnight Co.			6100
		Accounts receivable-Midnight Co.				6100
		(Accepted a note for time extension
		on his past due accounts receivable)
	Mar 17.	Notes receivable-Ava privet			2400
		Accounts receivable-Ava privet				2400
		(Accepted a note for time extension
		on his past due accounts receivable)
	Apr 16.	Accounts receivable-Ava privet			2414
		Interest revenue				14
		Notes receivable-Ava privet				2400
		(dishonored note when presented for payment)
	May 31.	Accounts receivable-Midnight Co.			6222
		Interest revenue				122
		Notes receivable-Midnight Co.				6100
		(refused to pay the note )
	July 16.	Cash			6285.6
		Interest revenue				63.6
		Accounts receivable-Midnight Co.				6222
		(Received payment from Midnight Co.)
	Aug 7.	Notes receivable-Mulan co			7450
		Accounts receivable-Mulan co				7450
		(Accepted a note for time extension
		on his past due accounts receivable)
	Sep 3.	Notes receivable-Noah Carson			2100
		Accounts receivable-Noah Carson				2100
		(Accepted a note for time extension
		on his past due accounts receivable)
	Nov 2.	Cash			2135
		Interest revenue				35
		Notes receivable-Noah Carson				2100
		(Received Carson’s payment of principal and interest)
	Nov 5.	Cash			7636.25
		Interest revenue				186.25
		Notes receivable-Mulan co				7450
		(Received Mulan’s payment of principal and interest)
	Dec 1.	Allowance for doubtful accounts			2414
		Accounts receivable-Ava privet				2414
		(Wrote off the Privet account)