Question

The following transactions are from Ohlm Company Year 1 December 16 - Accepted a $10,800, 60-day, 8% note in granting Danny Todd a time extension on his past-due account receivable. December 31 – Made an adjustment entry to record the accrued interest on the Todd note. Year 2 February 14 – Received Todd’s payment of principal and interest on the note dates December 16. March 2 – Accepted a $6,100, 8%, 90-day note in granting a time extension on the past- due account receivable from Midnight Co. March 17 – Accepted a $2,400, 30-day, 7% note in granting Ava Privet a time extension on her past-due account receivable. April 16 – Privet dishonored her note. May 31 – Midnight Co. dishonored its note. August 7 – Accepted s $7,440, 90-day, 10% note in granting a time extension on the past-due account receivable of Mulan Co. September 3 – Accepted a $2,100, 60-day, 10% note in granting Noah Carson a time extension on his past-due account receivable. November 2 – Received payment of principal plus interest from Carson for the September 3 note. November 5 – Received payment of principal plus interest from Mulan for the August 7 note. December 1 – Wrote off Privet account against the Allowance for Doubtful Accounts. Required 1. Prepare journal entries to record these transactions and events.

Answer 1

Solution:

Date	Particulars	Debit	Credit
Dec-16	Notes Receivable	10,800
	Accounts Receivable		10,800
Dec-31	Interest Receivable	36
	Interest Revenue		36
	(10,800 * 8% * 15/360)
Feb-14	Cash	10,944
	Interest Receivable		36
	Interest Revenue		108
	Notes Receivable		10,800
Mar-02	Notes Receivable--Midnight Co	6,100
	Accounts Receivable--Midnight Co		6,100
Mar-17	Notes Receivable	2,400
	Accounts Receivable		2,400
Apr-16	Accounts Receivable	2,414
	Interest Revenue (2,400 * 7% * 30/360)		14
	Notes Receivable		2,400
May-31	Accounts Receivable--Midnight Co	6,222
	Interest Revenue (6,100 x 8% x 90/360)		122
	Notes Receivable--Midnight Co		6,100
Aug-07	Notes Receivable--Mulan Co	7,440
	Accounts Receivable--Mulan Co		7,440
Sep-03	Notes Receivable--Noah Carson	2,100
	Accounts Receivable--Noah Carson		2,100
Nov-02	Cash	2,135
	Interest Revenue (2,100 * 10% * 60/360)		35
	Notes Receivable		2,100
Nov-05	Cash	7,626
	Interest Revenue (7,440 * 10% * 90/360)		186
	Notes Receivable		7,440
Dec-01	Allowance for Doubtful Accounts	2,414
	Accounts Receivable		2,414