Question

2016 Dec. 16 Accepted a $14,500, 60-day, 9% 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) $7,200, 98, 90-day note dated this day in granting a time extension on the past-due account receivable from Midnight Co. 17 Accepted a(n) $2,800, 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 98. Aug. 7 Accepted a(n) $7,150, 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(n) $3,100, 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.

Answer 1

Without rounding off

Total Through Maturity $14,500 9% Principal Rate (%) Time Total interest Interest Recognized December 31 $14,500 9% 15/360 54.00 60/360 218.00 $ $ Debit Credit Date Dec-16 General Journal Notes receivable-D. Todd Accounts receivable-D. Todd $ 14,500.00 $ 14,500.00 Dec-31 Interest receivable $ 54.00 Interest revenue $ 54.00 A. Privet Note - March 17, 2015 N. Carson Note - September 3, 2015 Midnight Co. Note - March 2, 2015 7,200.00 $ $ Principal Rate (%) Time Total interest 9% 2,800.00 $ 7% 30/360 16.00 $ Total Through Maturity Mulan Note - August 7, 2015 7,150.00 $ 10% 90/360 179.00 $ Midnight Co. Note - May 31, 2015 7,362.00 $ 9% 46/360 85.00 $ 3,100.00 10% 60/360 52.00 90/360 162.00 $ $

Date Debit Credit Feb-14 $ 14,718.00 General Journal Cash Interest revenue Interest receivable Notes receivable-D. Todd $ $ 164.00 54.00 14,500.00 $ Mar-02 $ 7,200.00 Notes receivable-Midnight Co Accounts receivable-Midnight Co $ 7,200.00 Mar-17 $ 2,800.00 Notes receivable-A. Privet Accounts receivable-A. Privet $ 2,800.00 Apr-16 $ 2,816.00 Accounts receivable-A. Privet Interest revenue Notes receivable-A. Privet 16.00 $ $ 2,800.00 $ 7,362.00 May-31 Accounts receivable-Midnight Co Interest revenue Notes receivable-Midnight Co $ 162.00 $ 7,200.00 Jul-16 Cash $ 7,447.00 $ Interest revenue Accounts receivable-Midnight Co 85.00 7,362.00 $ $ 7,150.00 Aug-07 Notes receivable-Mulan Accounts receivable-Mulan $ 7,150.00 Sep-03 $ 3,100.00 Notes receivable-N. Carson Accounts receivable-N. Carson $ 3,100.00 Nov-02 $ 3,152.00 Cash Interest revenue Notes receivable-N. Carson $ 52.00 3,100.00 $ Nov-05 $ 7,329.00 Cash Interest revenue $ 179.00 Notes receivable-Mulan $ 7,150.00 Dec-01 $ 2,816.00 Allowance for doubtful accounts Accounts receivable-A. Privet $ 2,816.00
With Rouding off

Total Through Maturity Principal Rate(%) Time $14,500 9% 60/360 217.50 Interest Recognized December 31 $14,500 9% 15/360 54.38 Total interest $ $ Date Debit Credit Dec-16 General Journal Notes receivable-D. Todd Accounts receivable-D. Todd $ 14,500.00 $ 14,500.00 Dec-31 Interest receivable $ 54.38 Interest revenue $ 54.38 Midnight Co. Note - March 2, 2015 N. Carson Note - September 3, 2015 $ $ A. Privet Note - March 17, 2015 2,800.00 7% $ $ $ Principal Rate (%) Time Total interest 7,200.00 9% 90/360 162.00 Total Through Maturity Mulan Note - August 7, 2015 7,150.00 10% 90/360 178.75 Midnight Co. Note - May 31, 2015 7,362.00 9% 46/360 84.66 3,100.00 10% 60/360 51.67 30/360 16.33 $ $ $ $ $

Date General Journal Debit Credit Feb-14 Cash $ 14,717.50 Interest revenue Interest receivable Notes receivable-D. Todd $ $ $ 163.13 54.38 14,500.00 Mar-02 7,200.00 Notes receivable-Midnight Co Accounts receivable-Midnight Co $ 7,200.00 Mar-17 $ 2,800.00 Notes receivable-A. Privet Accounts receivable-A. Privet $ 2,800.00 Apr-16 Accounts receivable-A. Privet $ 2,816.33 $ Interest revenue Notes receivable-A. Privet 16.33 2,800.00 $ $ 7,362.00 May-31 Accounts receivable-Midnight Co Interest revenue Notes receivable-Midnight Co $ 162.00 7,200.00 $ Jul-16 $ 7,446.66 Cash Interest revenue Accounts receivable-Midnight Co $ 84.66 7,362.00 $ Aug-07 $ 7,150.00 Notes receivable-Mulan Accounts receivable-Mulan $ 7,150.00 Sep-03 $ 3,100.00 Notes receivable-N. Carson Accounts receivable-N. Carson $ 3,100.00 Nov-02 Cash $ 3,151.67 $ 51.67 Interest revenue Notes receivable-N. Carson $ 3,100.00 Nov-05 $ 7,328.75 Cash Interest revenue Notes receivable-Mulan $ $ 178.75 7,150.00 Dec-01 $ 2,816.33 Allowance for doubtful accounts Accounts receivable-A. Privet $ 2,816.33