Question

The following selected transactions are from Gonzalez Company. Year 1 Dec. 16 Accepted a $15, 600, 60-day, 10% note in granting Lindsey Martin a time extension on his past-due account receivable. 31 Made an adjusting entry to record the accrued interest on the Martin note. Year 2 Feb. 14 Received Martin's payment of principal and interest on the note dated December 16. Mar. 2 Accepted a $10,000, 10%, 90-day note in granting a time extension on the past-due account receivable from Hall Co. 17 Accepted a $4,800, 30-day, 7% note in granting Carlos Sanchez a time extension on her past-due account receivable. Apr. 16 Sanchez dishonored her note. May 31 Hall Co. dishonored its note. Aug. 7 Accepted a $14,000, 90-day, 10% note in granting a time extension on the past-due account receivable of Mitchell Co. Sep. 3 Accepted a $6,600, 60-day, 10% note in granting Than Nguyen a time extension on his past-due account receivable. Nov. 2 Received payment of principal plus interest from Nguyen for the September 3 note. Nov. 5 Received payment of principal plus interest from Mitchell for the August 7 note. Dec. 1 wrote off the Sanchez account against the Allowance for Doubtful Accounts.

Answer 1

5	May 31	Accounts receivable – Hall Co.	10250
		Notes receivable – Hall Co.		10000
		Interest revenue (10000*10%*90/360)		250
10	Dec 01	Allowance for doubtful accounts	4828
		Accounts receivable – C. Sanchez		4828

May 31 – Hall receivable:
Receivable balance	10250
Interest rate	10.0%
Number of days’ interest to be recorded in year 2	45
Principal x rate x days/360 =	$128