Question

Chec Exercise 9-11 Notes receivable transactions LO C2 Following are selected transactions of Danica Company for 2016 Dec. 13 Accepted a $17,000, 45-day, 104 note dated December 13 in granting Miranda Lee a time extension on her past-due account receivable. 31 Prepared an adjusting entry to record the accrued interest on the Lee note. Complete the table to calculate the interest amounts at December 31st and use the calculated value to prepare your journal entries (Do not round your intermediate calculations. Use 360 days a year.) Complete this question by entering your answers in the tabs below. Interest General Amounts Journal Complete the table to calculate the interest amounts at December 31st Interest Total Through Recognized Maturity December 31 Principal Rate (%) Time Total interest General Jeurnal Trtarest Amounts

Answer 1

Solution Required a.: Computation of interest amounts at December 31st Principal Rate (%) Time (WN-1) Total Interest 1 Total Through Maturity $17,000 10% 0.125 $212.50 Interest Recognized December 31 $17,000 10% 0.05 $85.00 WN-1: Calculation of Time Total through maturity Time = 45 days / 360 days = 0.125 Till December 31 Time - 18 days / 360 days = 0.05 Required b.: Journal Entries Credit Date Dec. 13, 2016 General Journal Debit Notes Receivables $17,000 Accounts Receivable (To record acceptance of $17,000, 45-day 10% note on past-due accounts receivables) $17,000 Credit Date Dec. 31, 2016 General Journal Debit Interest Receivable $85 Interest Revenue (To record the accrued interest on the Lee note) $85