Question

1. BC Company extended the time to pay an accounts receivable by having the client sign a note receivable. The note is for $10,000 at an interest rate of 6% due in 180 days. Assuming the note was signed on August 3, 2012, prepare all entries for 2012 and 2013 for the note. Be sure to correctly date the journal entries. 2. BC Company extended the time to pay an accounts receivable by having the client sign a note receivable. The note is for $10,000 at an interest rate of 6% due in 180 days. Assuming the note was signed on March 1, 2012, prepare all entries for 2012 and 2013 for the note. Be sure to correctly date the journal entries.

Answer 1

SOLUTION: 1
Journal Entries
Sr. No.	Date	Account Title and explanation	Debit	Credit
1	Aug 03, 2012	Account Receivable	$10,000
		Note Receivable		$10,000
2	Dec 31, 2012	Interest Receivable	$250
		Interest Revenue		$250
3	Jan 30, 2013	Cash	$10,300
		Interest Receivable		$250
		Interest Revenue		$50
		Note Receivable		$10,000
	WORKING NOTE: 1
		Note signed Dated	Aug 03, 2012
		Balance days in aug	28	Days
		Days in Sept	30	Days
		Days in Oct	31	Days
		Days in Nov	30	Days
		Days in Dec	31	Days
		Total days in 2012	150	Days
		Days In 2013
		Balance days in january from 180 days =	30	Days
		Total Days of note	180	Days
		CALCULATION OF INTEREST OF 2012 :
		Interest on $ 10,000 @ 6% = $ 10,000 X 6% =	$600
		Interest for 150 Days = ($ 600 X 150 Days / 360 Days)	$250
		CALCULATION OF INTEREST OF 2013 :
		Interest on $ 10,000 @ 6% = $ 10,000 X 6% =	$600
		Interest for 30 Days = ($ 600 X 30 Days / 360 Days)	$50
SOLUTION: 2
Journal Entries
Sr. No.	Date	Account Title and explanation	Debit	Credit
1	Mar 01, 2012	Account Receivable	$10,000
		Note Receivable		$10,000
2	Aug 28, 2012	Cash	$10,300
		Interest Revenue		$300
		Note Receivable		$10,000
	WORKING NOTE: 1
		Note signed Dated	March 01,2012
		Balance days in Mar	30	Days
		Days in Apr	30	Days
		Days in May	31	Days
		Days in June	30	Days
		Days in July	31	Days
		Days in Aug	28	Days
			180
		CALCULATION OF INTEREST OF 2012 :
		Interest on $ 10,000 @ 6% = $ 10,000 X 6% =	$600
		Interest for 180 Days = ($ 600 X 180 Days / 360 Days)	$300