Question

Following are transactions for Vitalo Company Nov. 1 Accepted a $8,000, 180-day, 6% note fron 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. Complete the table to calculate the interest amounts at December 31st and April 30th and use those calculated values to prepare your Journal entries. (Do not round intermediate calculations. Use 360 days a year.) Complete this question by entering your answers in the tabs below. Interest Amounts General Journal Complete the table to calculate the interest amounts at December 319 and April 30th Total Through Maturity November 1 Through December 31 January Through April 30 Principal Rate(%) Time Total interest General Journal >

Answer 1

		November 1	January 1
	Total Through	Through	Through
	Maturity	December 31	April 30
Principal	8,000	8,000	8,000
Rate (%)	6%	6%	6%
Time	180 days	60 days	120 days
Total Interest	$240	$80	$160

Interest expense from November 1 to December 31 = 8,000 x 6% x 60/360

= $80

Interest expense from January 1 to April 30 = 8,000 x 6% x 120/360

= $160

1.

Journal

Date	General Journal	Debit	Credit
November 1	Note receivable	$8,000
	Accounts receivable- Kelly white		$8,000

2.

Journal

Date	General Journal	Debit	Credit
December 31	Interest receivable	$80
	Interest revenue		$80

3.

Journal

Date	General Journal	Debit	Credit
April 30	Cash	$8,240
	Note receivable		$8,000
	Interest revenue		$160
	Interest receivable		$80

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