Question

2016 Dec. 13 Accepted a $20,000, 45-day, 8% note dated December 13 in granting Miranda Lee a time extension on her past-due account receivable. 31 Prepared an adjusting entry to record the accrued interest on the Lee note. 2017 Jan. 27 Received Lee's payment for principal and interest on the note dated December 13. Mar. 3 Accepted a $14,000, 8%, 90-day note dated March 3 in granting a time extension on the past-due account receivable of Tomas Company. 17 Accepted a $12,000, 30-day, 6% note dated March 17 in granting H. Cheng a time extension on his past-due account receivable. Apr. 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 interest amounts and use those calculated values to prepare your journal entries. (Do not round intermediate calculations. Use 360 days a year.)

Answer 1

	M.Lee Note
		total	Amount	interest
		through	accrued at	Recognized
		Maturity	31-Dec	27-Jan
	Principal	20,000	20,000	20,000
	Rate(%)	8%	8%	8%
	time	45/360	18/360	27/360
	total intt	200	80	120
	Tomas co Note
		total
		through
		Maturity
	Principal	14,000
	Rate(%)	8%
	time	90/360
	total intt	280
	H.Cheng note
		total
		through
		Maturity
	Principal	12,000
	Rate(%)	6%
	time	30/360
	total intt	60
	Journal Entries
	Date	General Journal				Debit	Credit
	2016
	13-Dec	Note receivable				20,000
		Accounts receivable					20,000
	31-Dec	interest receivable				80
		interest income					80
	2017
	27-Jan	Cash				20,200
		interest receivable					80
		interest income					120
		Note receivable -M lee					20,000
	3-Mar	Note receivable				14,000
		Account receivable-Tomas					14,000
	17-Mar	Note receivable				12,000
		Account receivable-H.Cheng					12,000
	16-Apr	Account receivable-H.Cheng				12,060
		interest income					60
		note receivable					12,000
	1-May	Allowance for Doubtful Accounts				12,060
		Accounts receivable-H.Cheng					12,060
	1-Jun	Cash				14,280
		interest income					280
		note receivable-tomas					14,000