Question

Check Det Revenue 838 Refer to the information in Exercise 7-11 and prepare the journal entries for the following selected trans actions of Danica Company for 2017 Exercise 7-12 Notes receivable transactions P4 2017 Check Tart a Jan. 27 Received Lee's payment for principal and interest on the note dated December 13. Mar. 3 Accepted a $5.000, 10%, 90-day note dated March 3 in granting a time extension on the past due account receivable of Tomas Company 17 Accepted a $2.000, 30-day, 9% note dated March 17 in granting H. Cheng a time extens his past-due account receivable. Apr. 16 Cheng dishonored his note when presented for payment. May Wrote off the Cheng account against the Allowance for Doubtful Accounts. June 1 Received the Tomas payment for principal and interest on the note dated March 3. $9.595 June $5,125 Prepare journal entries to record these selected transactions for Vitalo Company (assume that no reversing entries are recorded). Exercise 7-13 Honoring a note P4 Nov. 1 Accepted a $6,000, 180-day, 8% note dated November 1 from Kelly White in granting a time extension on her past-due account receivable. Dec. 31 Adjusted the year-end accounts for the accrued interest earned on the White note. Apr. 30 White honored her note when presented for payment; February has 28 days for the current year. CASIO BEGAARD SL-300VC TWO WAY POWER REWRDING END-OF-porin

exercise 7-13

Answer 1

Journal

Nov. 1	Note receivable	6,000
	Accounts receivable		6,000
Dec. 31	Interest receivable	80
	Interest revenue		80
April 30	Cash	6,240
	Note receivable		6,000
	Interest receivable		80
	Interest revenue		160

Interest revenue to be recognized on December 31 = 6,000 x 8% x 60/360

= $80

Interest revenue to be recognized on April 30 = 6,000 x 8% x 120/360

= $160

Note: It has been assumed that year has 360 days. If 365 days are taken, interest calculations will slightly differ.

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