Question

Problem 8-11A Notes receivable LO4 CHECK FIGURES:d. Interest income = $454.93 e. Cash = $90,499.32 Vauxall Holdings showed the following information regarding its notes receivable: Date of Note Interest Rate Maturity Date ACE In Dec 31 2020 Accrued Interest at Dec. 31 2020- Note Principal Term Nov. 1/19 $240.000 4.0% 2 Jan. 5/20 100,000 5.0% Nov. 20/20 90.000 4.5% 4 Dec. 10/20 120,000 5.5% "Round calculations to the newest whole cont. 180 days 90 days 45 days 30 days Required for each note: a. Determine the maturity date. b. Calculate the days of accrued interest, if any, at December 31, 2020 (Vauxall Holdings' year-end) c. Calculate the amount of accrued interest, if any, at December 31, 2020. For Note 3: d. Prepare the entry to record the accrued interest at December 31, 2020. e. Prepare the entry to record the collection on the maturity date. Assume that both interest and principal collected at maturity. KAR

Answer 1

a., b., c.

Date of Note	Principal	Interest Rate	Term	Maturity Date	Days of accrued interest at Dec 31, 2020	Accrued interest at Dec 31, 2020
Nov. 1/19	$        240,000.00	4.0%	180 days	Apr. 29/20
Jan. 5/20	$        100,000.00	5.0%	90 days	Apr. 4/20
Nov. 20/20	$          90,000.00	4.5%	45 days	Jan. 4/21	41	$         454.93
Dec. 10/20	$        120,000.00	5.5%	30 days	Jan. 9/21	21	$         379.73

Since 2020 is a leap year, for Calculation of maturity date for Note Nov 1/19 has been calculated by taking 29 days in february

d.

Date	Account Titles	Debit	Credit
Dec-31	Interest Receivable	$                834.66
	Interest Revenue		$             834.66

e.

Date	Account Titles	Debit	Credit
Apr. 29/20	Cash	$        244,721.31
	Note Receivable		$     240,000.00
	Interest Receivable		$         1,573.77	=240000*4%*60/366
	Interest Revenue		$         3,147.54	=240000*4%*120/366
Apr. 4/20	Cash	$        101,229.51
	Note Receivable		$     100,000.00
	Interest Revenue		$         1,229.51	=100000*5%*90/366
Jan. 4/21	Cash	$          90,499.32
	Note Receivable		$       90,000.00
	Interest Receivable		$             454.93	=90000*4.5%*41/365
	Interest Revenue		$               44.38	=90000*4.5%*4/365
Jan. 9/21	Cash	$        120,542.47
	Note Receivable		$     120,000.00
	Interest Receivable		$             379.73	=120000*5.5%*21/365
	Interest Revenue		$             162.74	=120000*5.5%*9/365