Question

Problem 7-5A Analyzing and journalizing notes receivable transactions LO C2, C3, P4 The following transactions are from Ohlm Company. (Use 360 days a year.) Year 1 Dec. 16 Accepted a $11,100, 60-day, 78 note in granting Danny Todd a time extension on his past-due account receivable. 31 Made an adjusting entry to record the accrued interest on the Todd note. Year 2 Feb. 14 Received Todd's payment of principal and interest on the note dated December 16. Mar. 2 Accepted a(n) $6,400, 71, 90-day note in granting a time extension on the past-due account receivable from Midnight Co. 17 Accepted a(n) $2,500, 30-day, 78 note in granting Ava Privet a time extension on her past-due account receivable. Apr. 16 Privet dishonored her note. May 31 Midnight Co. dishonored its note. Aug. 7 Accepted a(n) $8,050, 90-day, 118 note in granting a time extension on the past-due account receivable of Mulan Co. Sep. Nov. Nov. Dec. 3 Accepted a(n) $2,670, 60-day, 98 note in granting Noah Carson a time extension on his past-due account receivable. 2 Received payment of principal plus interest from Carson for the September 3 note. 5 Received payment of principal plus interest from Mulan for the August 7 note. 1 Wrote off the Privet account against the Allowance for Doubtful Accounts. Required: 1-a. First, complete the table below to calculate the interest amount at December 31, Year 1 1-b. Use the calculated value to prepare your journal entries for Year 1 transactions. 1-c. First, complete the table below to calculate the interest amounts 1-d. Use those calculated values to prepare your journal entries for Year 2 transactions, 2. If Ohim pledged its receivables as security for a loan from the bank, where on the financial statements does it disclose this pledge of receivables?

Answer 1

1-a.				Total through maturity	Interest recognized Dec 31.
	Principal			11100	11100
	Rate (%)			7%	7%
	Time			60/360	15/360
	Total interest			129.5	32.375
1-b.	Date	Account tiltes and explanation			Debit	Credit
	Dec 16.	Notes receivable-Todd			11100
		Accounts receivable-Todd				11100
		(Accepted a note for time extension
		on his past due accounts receivable)
	Dec 31.	Interest receivable			32.375
		Interest revenue				32.375
		(Interest revenue accrued)
1-c.				Total through maturity
				Midnight Co. Note - March 2, Year 2	A. Privet Note - March 17, Year 2	Mulan Note - August 7, Year 2	N. Carson Note - September 3, Year 2
	Principal			6400	2500	8050	2670
	Rate (%)			7%	7%	11%	9%
	Time			90/360	30/360	90/360	60/360
	Total interest			112	14.58	221.375	40.05
1-d.	Date	Account tiltes and explanation			Debit	Credit
	Feb 14.	Cash		(11100+129.5)	11229.5
		Interest revenue		(129.5-32.375)		97.125
		Interest receivable				32.375
		Notes receivable-Todd				11100
		(Received Todd’s payment of principal and interest)
	Mar 2.	Notes receivable-Midnight Co.			6400
		Accounts receivable-Midnight Co.				6400
		(Accepted a note for time extension
		on his past due accounts receivable)
	Mar 17.	Notes receivable-Ava privet			2500
		Accounts receivable-Ava privet				2500
		(Accepted a note for time extension
		on his past due accounts receivable)
	Apr 16.	Accounts receivable-Ava privet (2500+14.58)			2514.58
		Interest revenue				14.58
		Notes receivable-Ava privet				2500
		(dishonored note when presented for payment)
	May 31.	Accounts receivable-Midnight Co. (6400+112)			6512
		Interest revenue				112
		Notes receivable-Midnight Co.				6400
		(Dishonored note when presented for payment)
	Aug 7.	Notes receivable-Mulan co	Add a comment Know the answer? Add Answer to: Problem 7-5A Analyzing and journalizing notes receivable transactions LO C2, C3, P4 The following transactions are... Your Answer: Post as a guest Your Name: What's your source? Earn Coins Coins can be redeemed for fabulous gifts. Log In Sign Up Post as anonymous Post Your Answer Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free. Similar Homework Help Questions Problem 7-5A Analyzing and journalizing notes receivable transactions LO C2, C3, P4 The following transactions are... Problem 7-5A Analyzing and journalizing notes receivable transactions LO C2, C3, P4 The following transactions are from Ohlm Company. (Use 360 days a year.) 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