Question

Exercise 7-14 On December 31, 2015, Oriole Co. performed environmental consulting services for Hayduke Co. Hayduke was short of cash, and Oriole Co. agreed to accept a $346,500 zero-interest-bearing note due December 31, 2017, as payment in full. Hayduke is somewhat of a credit risk and typically borrows funds at a rate of 11%. Oriole is much more creditworthy and has various lines of credit at 6%.

Prepare the journal entry to record the transaction of December 31, 2015, for the Oriole Co. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31, 2015 SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT

Assuming Oriole Co.’s fiscal year-end is December 31, prepare the journal entry for December 31, 2016. (Round answers to 0 decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31, 2016 SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT

Assuming Oriole Co.’s fiscal year-end is December 31, prepare the journal entry for December 31, 2017. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31, 2017 (To record interest revenue) (To record collection of note) SHOW LIST OF ACCOUNTS Accounts Payable Accounts Receivable Advertising Expense Allowance for Doubtful Accounts Bad Debt Expense Cash Cash Over and Short Due from Factor Due to Customer Discount on Notes Payable Discount on Notes Receivable Freight-In Freight-Out Gain on Disposal of Land Interest Expense Interest Payable Interest Receivable Interest Revenue Inventory Land Loss on Sale of Receivables Miscellaneous Expenses No Entry Notes Payable Notes Receivable Office Expense Owner's Drawings Petty Cash Postage Expense Purchase Discounts Recourse Liability Sales Discounts Sales Discounts Forfeited Sales Revenue Service Revenue Supplies Supplies Expenses Unearned Sales Revenue

Answer 1

Journal Entries
Date	Accounting titles & Explanations	Debit	Credit
31-Dec	Notes receivable	$346,500
	Discount on notes receivable (bF)		$65,273
	sales revenue		$281,227
	(346500X Pvif @ 11% in 2 year)
	(346500X 0.811622)
31-Dec	Discount on notes receivable	$30,935
	interest revenue (281227*11%)		$30,935
31-Dec	Discount on notes receivable	$34,338
	interest revenue (65273-30935)		$34,338
	(34,710 -16529 )
	Cash	$346,500
	Note Receivable		$346,500