Question

The following selected transactions are from Lee Company. 2016 Dec. 16 Accepted a $22,800, 60-day, 10% note dated this day in granting Carlos Sanchez a time extension on his past-due account receivable. 31 Made an adjusting entry to record the accrued interest on the Sanchez note. 2017 Feb. 14 Received Sanchez's payment of principal and interest on the note dated December 16. Mar. 2 Accepted a $11,000, 10%, 90-day note dated this day in granting a time extension on the past-due account receivable from Mitchell Co. 17 Accepted a $8,400, 30-day, 7% note dated this day in granting Paula Parker a time extension on her past-due account receivable. Apr. 16 Parker dishonored her note when presented for payment. May 31 Mitchell co. refused to pay the note that was due to Lee Co. on May 31. Prepare the journal entry to charge the dishonored note plus accrued interest to Mitchell Co.'s accounts receivable. July 16 Received payment from Mitchell Co. for the maturity value of its dishonored note plus interest for 46 days beyond maturity at 10% Aug. 7 Accepted a $12,000, 90-day, 6% note dated this day in granting a time extension on the past-due account receivable of King Co. Sep. 3 Accepted a $13,800, 60-day, 10% note dated this day in granting Sarah Walker a time extension on his past-due account receivable. Nov. 2 Received payment of principal plus interest from Walker for the September 3 note. Nov. 5 Received payment of principal plus interest from King for the August 7 note. Dec. 1 Wrote off the Parker account against the Allowance for Doubtful Accounts.

Answer 1

Lee Company 1. First, complete the table below to calculate the interest amount at December 31. Carlos Sanchez Note - December 16, 2016 Principal Rate(%) Time Total interest Total through maturity 22800 10% 60/360 380 Interest recognized Dec-31 22800 10% 15/360 95 First, complete the table below to calculate the interest amounts. Mitchell Co. Note Paula Parker Note King Co. Note Mitchell Co. Note Sarah Walker Note 2.3.2017 17.3.2017 7.8.2017 31.5.2017 3.9.2017 Principal 11000 8400 12000 11275 13800 Rate(%) 10% 7% 6% 10% 10% Time 90/360 30/360 90/360 46/360 60/360 Total interest 275 49 180 144 230

Journal Enteries Date Particulars 16.12.2016 Notes receivable-Carlson Sanchez To Accounts receivable-Carlson Sanchez Debit in $ Credit in $ 22800 22800 95 31.12.2016 Interest receivable To Interest revenue 95 Journal Enteries Date Particulars 14.2.2017 Cash To Interest revenue To Interest receivable To Notes receivable- Carson Sanchez Debit in $ Credit in $ 23180 285 95 22800 2.3.2017 11000 Notes receivable-Mitchell Co To Accounts receivable - Mitchell Co 11000 17.3.2017 8400 Notes receivable-Paula Parker To Accounts receivable - Paula Parker 8400 16.4.2017 8449 Accounts receivable - Paula Parker To Interest revenue To Notes receivable- Paula Parker 49 8400 31.5.2017 11275 Accounts receivable -Mitchell Co To Interest revenue To Notes receivable-Mitchell Co 275 11000 7.8.2017 12000 Notes receivable-King Co To Accounts receivable - King Co 12000 3.9.2017 13800 Notes receivable-Sarah Walker To Accounts receivable - Sarah Walker 13800 2.11.2017 Cash 14030 To Interest revenue To Notes receivable- Sarah Walker 230 13800 5.11.2017 Cash 12180 To Interest revenue To Notes receivable-Mitchell Co 180 12000 1.12.2017 8449 Allowance for doubtful accounts To Accounts receivable - Paula Parker 8449