Question

13 Problem 7-5A Analyzing and journalizing notes receivable transactions LO C2, C3, P4 The following selected transactions are from Ohlm Company. (Use 360 days a year) 20 points 2016 Dec. 16 Accepted a $11,100, 60-day, 10% note dated this day in granting Danny Todd a time extension on his past-due Skipped account receivable. 31 Made an adjusting entry to record the acerved interest on the Todd note. edook 2017 Feb. 14 Received Todd's paynent of principal and interest on the note dated December 16. Print 2 Accepted a(n) $7,500, 10%, 90-day note dated this day in granting a time extension on the past-due aecount receivable from Midnight Co. 17 Accepted a(n) $2,000, 30-day, 78 note dated this day in granting Ava Privet a time extension on her past-due account receivable. Mar. References Apr. 16 Privet dishonored her note when presented for payment. May 31 Midnight Co. refused to pay the note that van due to Ohlm Co. on May 31. Prepare the journal entry to charge the dishonored note plus accrued interest to Midnight Co. 's accounts receivable. July 16 Received payment from Midnight Co. for the maturity value of its dishonored note plus interest for 46 days beyond maturity at 10% 7 Accepted a (n) $7,200, 90-day, 10 note dated this day in granting a tine extension on the past-due account receivable of Malan Co. 3 Accepted a(n) $3,830, 60-day, 12 note dated this day in granting Noah Carson a time extension on hin past-due account receivable. 2 Received payment of prineipal plus interest from Carson for the September 3 note 5 Received paynent of principal plus interest from Mulan for the August 7 note. 1 Wrote off the Privet account against the Allowance for Doubtful Accounts. Aug Sep. Nov. Nov. Dec. Required: 1-a. First, complete the table below to calculate the interest amount at December 31, 2016 1-b. Use the calculated value to prepare your journal entries for 2016 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 2017 transactions.

Answer 1

Required 1A Total Through Interest Recognized Maturity December 31 11,100 11,100 10% 60/360 15/360 185 Principal [a] Rate (%) [b] Time (c) Total Interest (axbxc] 10% 46 Notes: Interest recognized should be recognized for only 15 days from December 16, 2016 - December 31, 2016

Required 1B Date Dec. 16 Debit Credit 11,100 General Journal Notes Receivable - D. Todd Accounts receivable - D. Todd [to records notes received from Danny Todd] 11,100 Dec. 31 Interest Receivable Interest Revenue [to record accrued interest on Danny Todd notes]

Required 1D Date Feb.14 Debit Credit 11,285 General Journal Cash (11,100 + 185) Notes receivable -D.Todd Interest receivable Interest revenue (185-46) [to record payment received from Todd along with the Interest) 11,100 46 139 Mar. 02 7,500 Notes receivable - Midnight Co. Accounts receivable - Midnight Co. [to records notes received from Midnight co.] 7,200 Mar. 02 2,000 Notes receivable - A.Privet Accounts receivable - A.Privet [to records notes received from A.Privet] 3,500 Apr.16 2,012 Accounts receivable - A.Privet Interest Receivable Notes receivable - A.Privet [to record the dishonored of note received from A.Privet on due date] 2,000 May. 31 7,688 Accounts receivable - Midnight Co. Interest Receivable Notes receivable - Midnight Co. [to record the dishonored of note received from Midnight Co. on due date] 188 7,500

July. 16 7,786 98 Cash Interest Revenue Accounts receivable - Midnight Co. [to record cash received from Midnight Co. along with the interest] 7,688 Aug.07 7,200 Notes receivable - Mulan Co. Accounts receivable - Mulan Co. [to records notes received from Mulan Co.] 7,200 Sept.03 3,830 Notes receivable - N.Carson Accounts receivable - N.Carson [to records notes received from N. Carson.] 3,830 Nov.02 3,907 Cash Notes receivable - N.Carson Interest revenue [to record cash received from N.Carson along with the Interest] 3,830 77 Nov.05 7,380 Cash Notes receivable - Mulan Co. Interest revenue [to record cash received from N.Carson along with the Interest] 7,200 180 Dec. 01 2,012 Allowance for Doubtful Debts Accounts receivable - A. Privet [to record write off A.Privet account] 2,012