Question

O Find V 12 A Ă BI U DAVA Ev styles Refer to the class lectures, how can a business estimate uncollectible? Describe all the Accounting assumptions used in the process. On October 12, 2020, Solf Inc. received from one of its customers, Ping Co., a $30,500, 8% 90 day not receivable in granting a time extension on Ping's past due account receivable Golf Co. haspa 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 "Onda earch р

Answer 1

Answer -

In the books of Solf Inc. CREDIT [$] DEBIT ($) $30,500 $30,500 $534.8 $534.8 DATE PARTICULAR 12/Oct/2020 Note Receivable a/c dr To Ping Co. a/c [Being note receivable received] 31/Dec/2020 Interest Receivable a/c dr To Interest Income a/c [Being interest income accrued] (note-1] 13/Jan/2021 Interest Receivable a/c dr To Interest Income a/c [Being interest income accrued] [note-2] 13/Jan/2021 Cash a/c dr To Notes Payable a/c To Interest Payable a/c [Being cash received] $66.8 $66.8 $31,101.6 $30,500 $601.6 Working Note- 1. Interest Income [From 12/Oct/2020 to 31/Dec/2020 i.e.80 days] = 30,500 X 8/100 X 80/365 = $534.8 2. Interest Income (From 1/Jan/2021 to 10/Jan/2021 i.e. 10 days] = 30,500 X8/100 X 10/365 = $66.8