Question

Exercise 7-12 Notes receivable transactions LO P4 Following are selected transactions of Danica Company for 2016 and 2017 points 2016 Dec. 13 Nocepted a $16,000, 45-day, 8: 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 acerued interest on the Lee note. look 2017 Jan. 27 Received Lee's payment for principal and interest on the note dated December 13. Mar. Accepted a 510,000, 81, 90-day note dated March 3 is granting time extension on the past-due account receivable of Company 17 Accepted a $8,000, 30-day, 101 note dated March 17 in granting it. Cheng a time extension on his past-due account receivable Apr. 16 . Cheng dishonored his note when presented for payment. May I wrote off the H. Cheng account against the Allowance for Doubtful Accounts. Sunel Received the Tomas payment for principal and interest on the note dated March 3. Complete the table to calculate the interest amounts and use those calculated values to prepare your journal entries. (Do not round Intermediate calculations. Use 360 days a year.)

Answer 1

M.Lee Note
	total	Amount	interest
	through	accrued at	Recognized
	Maturity	31-Dec	27-Jan
Principal	16,000	16,000	16,000
Rate(%)	8%	8%	8%
time	45/360	18/360	27/360
total intt	160	64	96
Tomas co Note
	total
	through
	Maturity
Principal	10,000
Rate(%)	8%
time	90/360
total intt	200
H.Cheng note
	total
	through
	Maturity
Principal	8,000
Rate(%)	10%
time	30/360
total intt	67
Journal Entries
Date	General Journal				Debit	Credit
2016
13-Dec	Note receivable				16,000
	Accounts receivable					16,000
31-Dec	interest receivable				64
	interest income					64
2017
27-Jan	Cash				16,160
	interest receivable					64
	interest income					96
	Note receivable -M lee					16,000
3-Mar	Note receivable				10,000
	Account receivable-Tomas					10,000
17-Mar	Note receivable				8,000
	Account receivable-H.Cheng					8,000
16-Apr	Account receivable-H.Cheng				8,067
	interest income					67
	note receivable					8,000
1-May	Allowance for Doubtful Accounts				8,067
	Accounts receivable-H.Cheng					8,067
1-Jun	Cash				10,200
	interest income					200
	note receivable-tomas					10,000