Question

M ENO QUESTION 3 (16 marks) A. On October 12, 2020, Golf Co. received from one of its customers, Ping Co., a $30,500,8% 90 day note receivable in granting a time extension on Ping's past due account receivable. Golf Co. has a December 31 year end. Ping Co. honoured the note at maturity. Prepare the entries for the issuance of the note, the end of year interest adjustment and the collection of the note at maturity (10 marks). Show calculations for marks

Answer 1

Date	Account Titles	Debit	Credit
Oct-12	Notes Receivable	$          30,500
	Accounts Receivable		$             30,500
	(Accepted note from customer)
Dec-31	Interest Receivable	$               535		=30500*8%*80/365
	Interest Revenue		$                   535
	(Interest revenue accrued for 80 days)
Jan-10	Cash	$          31,102		=30500+535+67
	Notes Receivable		$             30,500
	Interest Receivable		$                   535	=30500*8%*80/365
	Interest Revenue		$                     67	=30500*8%*10/365
	(Note collected on maturity)

Oct 13 to Dec 31 = 80 days