Question

Following are selected transaction of Danica Company for 2016 and 2017.

2016

December 13 Accepted a $16,000, 45-day, 8% note dated December 13 in granting Miranda Lee a time extension on her past-due account receivable.

Dec 31 Prepaid an adjusting entry to record the accured interest on the Lee note

2017.

Jan 27 Received Lee's payment for principal and interest on the note dated December 13.

March 3 Accepted a $10,000, 6%, 90-day note dated March 3 in granting a time extension on the past-due account receivable of Tomas Company.

March 7 Accepted a $8,000, 30-day, 6% note dated March 17 in granting H. Cheng a time extension on his past-due account receivable

April 16 H. Cheng dishonored his note when presented for payment

May 1 Wrote off the H. Cheng account against the Allowance for Doubtful Accounts.

June 1 Received the Tomas payment for principal and interest on the note dated March 3.

Complete the table to calculate the interests amounts and use those calculated values to prepare your journal entries

(Do not round intermediate calculations. use 360 days a year)

M Lee Note-Complete the table to calculate the interest amounts. (Total through maturity- Amount Accrued at December 31-Interest Recognized January 27)

Tomas Co Note and H. Cheng Note

Complete the table to calculate the interest amount on Both companies. (Principal, Rate %, Time, Total Interest) Then use the calculated values to prepare your journal entries. PLEASE SHOW YOUR WORK

Answer 1

	M.Lee Note
		total	Amount	interest
		through	accrued at	Recognized
		Maturity	31-Dec	27-Jan
	Principal	16,000	16,000	16,000
	Rate(%)	8%	8%	8%
	time	45/360	18/360	27/360
	total intt	160	64	96
	Tomas co Note
		total
		through
		Maturity
	Principal	10,000
	Rate(%)	6%
	time	90/360
	total intt	150
	H.Cheng note
		total
		through
		Maturity
	Principal	8,000
	Rate(%)	6%
	time	30/360
	total intt	40
	Journal Entries
	Date	General Journal				Debit	Credit
	2017
	27-Jan	Cash				16,160
		interest receivable					64
		interest income					96
		Note receivable					16,000
	3-Mar	Note receivable				10,000
		Account receivable-Tomas					10,000
	17-Mar	Note receivable				8,000
		Account receivable-H.Cheng					8,000
	16-Apr	Account receivable-H.Cheng				8,040
		interest income					40
		note receivable					8,000
	1-May	Allowance for Doubtful Accounts				8,040
		Accounts receivable-H.Cheng					8,040
	1-Jun	Cash				10,150
		interest income					150
		note receivable					10,000
		journal entries for year 2016 if required
	Date	General Journal				Debit	Credit
	13-Dec	Note receivable				16,000
		Accounts receivable					16,000
	31-Dec	interest receivable				64
		interest income					64