Question

The following transactions are from Ohlm Company. (Use 360 days a year.) Year 1 Dec. 16 Accepted a $11,900, 60-day, 6% note in granting Danny Todd a time extension on his past-due account receivable. 31 Made an adjusting entry to record the accrued interest on the Todd note. Year 2 Feb. 14 Received Todd's payment of principal and interest on the note dated December 16. Mar. 2 Accepted a(n) $6,900, 6%, 90-day note in granting a time extension on the past-due account receivable from Midnight Co. 17 Accepted a(n) $3,700, 30-day, 7% note in granting Ava Privet a time extension on her past-due account receivable. Apr. 16 Privet dishonored her note. May 31 Midnight Co. dishonored its note. Aug. 7 Accepted a(n) $8,150, 90-day, 11% note in granting a time extension on the past-due account receivable of Mulan Co. Sep. 3 Accepted a(n) $2,230, 60-day, 9% note in granting Noah Carson a time extension on his past-due account receivable. Nov. 2 Received payment of principal plus interest from Carson for the September 3 note. Nov. 5 Received payment of principal plus interest from Mulan for the August 7 note. Dec. 1 Wrote off the Privet account against the Allowance for Doubtful Accounts. Required: 1-a. First, complete the table below to calculate the interest amount at December 31, Year 1. 1-b. Use the calculated value to prepare your journal entries for Year 1 transactions. 1-c. First, complete the table below to calculate the interest amounts. 1-d. Use those calculated values to prepare your journal entries for Year 2 transactions 2. If Ohlm pledged its receivables as security for a loan from the bank, where on the financial statements does it disclose this pledge of receivables?

Answer 1

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General Journal:						Dec-31, Todd:
						Principal		$   11,900
Date	Account	Debit	Credit			ROI		6%
Year 1						No of Days		15
Dec 16	Note Receivable	$   11,900
	Accounts Receivable-Todd		$   11,900			Interest Revenue		$           30
Dec 31	Interest Receivable	$           30				Feb-14, Todd:
	Interest Revenue		$           30			Principal		$   11,900
						ROI		6%
						No of Days		45
Year 2
Feb 14	Cash	$   12,019				Interest Revenue		$           89
	Note Receivable		$   11,900
	Interest Revenue		$           89			April -16, Privet:
	Interest Receivable		$           30			Principal		$     3,700
						ROI		7%
Mar 2	Note Receivable	$     6,900				No of Days		30
	Accounts Receivable-Midnight		$     6,900
						Interest Revenue		$           22
Mar 17	Note Receivable	$     3,700
	Accounts Receivable-Privet		$     3,700			May 31, Midnight:
						Principal		$     6,900
Apr 16	Accounts Receivable-Privet	$     3,722				ROI		6%
	Note Receivable		$     3,700			No of Days		90
	Interest Revenue		$           22
						Interest Revenue		$         104
May 31	Accounts Receivable-Midnight	$     7,004
	Note Receivable		$     6,900
	Interest Revenue		$         104
Aug 7	Note Receivable	$     8,150				Nov 2, Noha
	Accounts Receivable-Mulan		$     8,150			Principal		$     2,230
						ROI		9%
Sep 3	Note Receivable	$     2,230				No of Days		60
	Accounts Receivable-Noah		$     2,230
						Interest Revenue		$           33
Nov 2	Cash	$     2,263
	Note Receivable		$     2,230			Nov 5, Mulan
	Interest Revenue		$           33			Principal		$     8,150
						ROI		11%
Nov 5	Cash	$     8,374				No of Days		90
	Note Receivable		$     8,150
	Interest Revenue		$         224			Interest Revenue		$         224
Dec 1	Allowance for Doubtful Accounts	$     3,722				Total interest Revenue for Year 2		$         472
	Accounts Receivable-Privet		$     3,722
Part 2
Must be disclosed this information in notes to its financial statements.