Question

Year 1

Dec.		16			Accepted a $16,800, 60-day, 12% note in granting Carolyn Collins a time extension on his past-due account receivable.
		31			Made an adjusting entry to record the accrued interest on the Collins note.

Year 2

Feb.		14			Received Collins’s payment of principal and interest on the note dated December 16.
Mar.		2			Accepted a $8,000, 6%, 90-day note in granting a time extension on the past-due account receivable from Perry Co.
		17			Accepted a $12,600, 30-day, 8% note in granting Jim Ohlm a time extension on her past-due account receivable.
Apr.		16			Ohlm dishonored her note.
May		31			Perry Co. dishonored its note.
Aug.		7			Accepted a $12,000, 90-day, 8% note in granting a time extension on the past-due account receivable of Gonzalez Co.
Sep.		3			Accepted a $6,600, 60-day, 10% note in granting Greg Taylor a time extension on his past-due account receivable.
Nov.		2			Received payment of principal plus interest from Taylor for the September 3 note.
Nov.		5			Received payment of principal plus interest from Gonzalez for the August 7 note.
Dec.		1			Wrote off the Ohlm account against the Allowance for Doubtful Accounts.

General Journal tab - Prepare the Year 2 journal entries related to the notes and accounts receivable of Sanchez Co.

Calculation of interest tab - Use the interest formula (P x R x T) to verify the amount of interest recorded in your entries.  Verify that total interest revenue agrees with the trial balance.

Journal entry worksheet < 1 2 3 4 5 6 7 8 9 10 > Feb. 14 Received Collins's payment of principal and interest on the $16,800, 60-day, 12% note dated December 16. The Sanchez Company does not prepare reversing entries. Verify the amount of interest using the "CALCULATION OF INTEREST" tab. Note: Enter debits before credits. Date General Journal Debit Credit Feb 14 Record entry Clear entry View general journal

Answer 1

Journal entries of Sanchez Co. for the year 2

Date	General journal	Debit	Credit
Feb 14	Bank a/c Dr.	17136
	To Notes receivable a/c		16800
	To Interest receivable a/c		336
	(Note collected from Collins)
March 2	Notes receivable a/c Dr.	8000
	To Accounts receivable a/c		8000
	(Notes recieved from Perry Co.)
March 17	Notes receivable a/c Dr.	12600
	To Accounts receivable a/c		12600
	(Notes received from Jim Ohlm)
April 16	Accounts receivable a/c Dr.	12684
	To Notes receivable a/c		12600
	To Interest revenue a/c		84
	(Dishonored Jim Ohlm's note)
May 31	Accounts receivable a/c Dr.	8120
	To Notes receivable a/c		8000
	To Interest revenue a/c		120
	(Dishonored Perry Co's note)
Aug 7	Notes receivable a/c Dr.	12000
	To Accounts receivable a/c		12000
	(Notes received from Gonzalez Co)
Sept 3	Notes receivable a/c Dr.	6600
	To Accounts receivable a/c		6600
	(Notes received from Greg Taylor)
Nov 2	Bank a/c Dr.	6710
	To Notes receivable a/c		6600
	To Interest revenue a/c		110
	(Note collected from Greg Taylor)
Nov 5	Bank a/c Dr.	12240
	To Notes receivable a/c		12000
	To Interest revenue a/c		240
	(Note collected from Gonzalez Co.)
Dec 1	Allowance for doubtful accounts a/c Dr.	12684
	To Notes receivable a/c		12684
	(Jim Ohlm's accounts written off)

Calculation of interest receivable:

Interest = (Principal*Rate)Days/Total days in an year

Collins:

Interest = (16,800*12%)*60/360= 336

Perry Co.:

Interest = (8000*6%)*90/360= 120

Jim Ohlm:

Interest = (12600*8%)*30/360= 84

Gonzalez Co.:

Interest = (12000*8%)*90/360= 240

Greg Taylor:

Interest = (6600*10%)*60/360= 110

Total interest revenue = 336+120+84+240+110= 890

Note: Assumed that there are 360 days in the year