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GL0701 - Based on Problem 7-5A LO C2, C3, P4 The following selected transactions are from...

GL0701 - Based on Problem 7-5A LO C2, C3, P4

The following selected transactions are from Hall Company.

Year 1

Dec. 16 Accepted a $13,200, 60-day, 12% note in granting Wang Lee a time extension on his past-due account receivable.
31 Made an adjusting entry to record the accrued interest on the Lee note.


Year 2

Feb. 14 Received Lee’s payment of principal and interest on the note dated December 16.
Mar. 2 Accepted a $10,000, 6%, 90-day note in granting a time extension on the past-due account receivable from Collins Co.
17 Accepted a $10,800, 30-day, 7% note in granting Kathy Perry a time extension on her past-due account receivable.
Apr. 16 Perry dishonored her note.
May 31 Collins Co. dishonored its note.
Aug. 7 Accepted a $20,000, 90-day, 6% note in granting a time extension on the past-due account receivable of Brown Co.
Sep. 3 Accepted a $3,000, 60-day, 10% note in granting Hao Lee a time extension on his past-due account receivable.
Nov. 2 Received payment of principal plus interest from Lee for the September 3 note.
Nov. 5 Received payment of principal plus interest from Brown for the August 7 note.
Dec. 1 Wrote off the Perry account against the Allowance for Doubtful Accounts.

1.Feb. 14 Received Lee's payment of principal and interest on the $13,200, 60-day, 12% note dated December 16. The Hall Company does not prepare reversing entries. Verify the amount of interest using the "CALCULATION OF INTEREST" tab.

2.Mar. 2 Accepted an $10,000, 6%, 90-day note in granting a time extension on the past-due account receivable from Collins Co.

3.Mar. 17 Accepted a $10,800, 30-day, 7% note in granting Kathy Perry a time extension on her past-due account receivable.

4.Apr. 16 Perry dishonored her note.

5.May 31 Collins Co. dishonored its note.

6.Aug. 7 Accepted a(n) $20,000, 90-day, 6% note in granting a time extension on the past-due account receivable of Brown Co.

7. Sept. 3 Accepted a $3,000, 60-day, 10% note in granting Hao Lee a time extension on his past-due account receivable.

8.Nov. 2 Received payment of principal plus interest from Lee for the September 3 note.

9.Nov. 5 Received payment of principal plus interest from Brown for the August 7 note.

10. Dec. 1 Wrote off the Perry account against Allowance for Doubtful Accounts. No additional interest was accrued.

Hall Co.
Calculation of interest revenue
February 14 - Lee note:
Principal
Interest rate
Number of days' interest to be recorded in Year 2
Number of days' interest to be recorded in Year 2
Principal
Interest rate
Number of days' interest to be recorded in Year 2
Number of days' interest to be recorded in Year 2
Number of days' interest to be recorded in Year 2
Total interest revenue - Year 2 $0

Solutions

Expert Solution

Date General journal Debit Credit
Year 1
Dec 16. Note receivable-Wang Lee 13200
Accounts receivable-Wang Lee 13200
(Notes received from customers)
Dec 31. Interest receivable (13200*12%*15/360) 66
Interest revenue 66
(Interest accrued)
Year 2
Feb 14. Cash (13200+66+198) 13464
Note receivable-Wang Lee 13200
Interest receivable (13200*12%*15/360) 66
Interest revenue (13200*12%*45/360) 198
(Payment on note received )
Mar 2. Note receivable-Collins Co. 10000
Accounts receivable-Collins Co. 10000
(Notes received from customers)
Mar 17. Note receivable-Kathy perry 10800
Accounts receivable-Kathy perry 10800
(Notes received from customers)
Apr 16. Accounts receivable-Kathy perry (10800+63) 10863
Note receivable-Kathy perry 10800
Interest revenue (10800*7%*30/360) 63
(Note dishonored)
May 31. Accounts receivable-Collins Co. (10000+150) 10150
Note receivable-Collins Co. 10000
Interest revenue (10000*6%*90/360) 150
(Note dishonored)
Aug 7. Note receivable-Brown Co. 20000
Accounts receivable-Brown Co. 20000
(Notes received from customers)
Sep 3. Note receivable-Hao Lee 3000
Accounts receivable-Hao Lee 3000
(Notes received from customers)
Nov 2. Cash (3000+50) 3050
Note receivable-Hao Lee 3000
Interest revenue (3000*10%*60/360) 50
(Payment on note received )
Nov 5. Cash (20000+300) 20300
Note receivable-Brown Co. 20000
Interest revenue (20000*6%*90/360) 300
(Payment on note received )
Dec 1. Allowance for doubtful accounts 10863
Accounts receivable-Kathy perry 10863
(Wrote off uncollectible account)
Calculation of interest revenue
$
February 14-Wang Lee note:
Principal a 13200
Interest rate b 12%

ekkarill92 answered 2 years ago
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