Question

GL0701 - Based on Problem 7-5A LO C2, C3, P4 The following selected transactions are from Clark Company. Year 1 Dec. 16 Accepted a $14,400, 60-day, 8% note in granting Hao Lee a time extension on his past-due account receivable. 31 Made an adjusting entry to record the accrued interest on the Lee note. Year 2 Feb. 14 Received Lee's payment of principal and interest on the note dated December 16. Mar. 2 Accepted a $9,000, 8%, 90-day note in granting a time extension on the past-due account receivable from Taylor Co. 17 Accepted a $4,200, 30-day, 10% note in granting Susan Allen a time extension on her past-due account receivable. Apr. 16 Allen dishonored her note. May 31 Taylor Co. dishonored its note. Aug. 7 Accepted a $12,000, 90-day, 12% note in granting a time extension on the past-due account receivable of Carter Co. Sep. 3 Accepted a $5,400, 60-day, 10% note in granting June Taylor a time extension on his past-due account receivable. ved payment of principal plus interest from Taylor for the September 3 note. Nov. 5 Received payment of principal plus interest from Carter for the August 7 note. Dec. 1 Wrote off the Allen account against the Allowance for Doubtful Accounts. Requirement General Journal General Ledger Trial Balance Schedule of Receivables Calculation of Interest General Journal tab - Prepare the Year 2 journal entries related to the notes and accounts receivable of Clark Co. Calculation of interest tab - Use the interest formula (P x R x T) to verify the amount of interest recorded in your entries. Verify that total interest revenue agrees with the trial balance.

Answer 1

Account Title & Explanation Debit Credit 22 Date 23 Year 1 16-Dec 8% Notes Receivable Hao Lee 24 14400 Accounts Receivable - Hao Lee 25 14400 (To record Notes receivable) 26 27 31-Dec Interest Receivable 28 48 Interest Revenue (14400*8%*15/360) 29 48 To record accrual of Interest) 30 31 32 Year 2 14-Feb Cash 33 92 Interest Receivable 34 48 Interest Revenue (14400 *8% *45/360) 35 144 8% Notes Receivable - Hao Lee 36 14400 (To record receive of notes receivable) 37 38 2-Mar 8 % Notes Receivable Taylor Co. 39 9000 Accounts Receivable Taylor Co. 9000 40 (To record Notes receivable) 41 42 17-Mar 10% Notes Receivable - Susan Allen 43 4200 Accounts Receivable Susan Allen 44 4200 (To record Notes receivable) 45

16-Apr Accounts Receivable Susan Allen 47 4235 10% Notes Receivable Susan Allen 48 4200 Interest Revenue (4200 10%*30/360) 49 35 To record dishonour of note) 50 51 31-May Accounts Receivable Taylor Co. 9180 52 8% Notes Receivable - Taylor Co. 53 9000 Interest Revenue (9000 8%*90/360) 54 180 (To record dishonour of note) 55 56 7-Aug 12% Notes Receivable - Carter Co. 57 12000 Accounts Receivable Carter Co. 58 12000 (To record Notes receivable) 59 60 3-Sep 10% Notes Receivable -Taylor Co. Accounts Receivable Taylor Co. 61 5400 62 5400 (To record Notes receivable) 63 64 2-Nov Cash 65 5490 Interest Revenue (5400 *10% *60/360) 10% Notes Receivable -Taylor 66 90 67 5400 (To record receive of notes receivable) 68

5-Nov Cash 12360 70 Interest Revenue (12000 *12% *90/360) 71 360 12% Notes Receivable - Carter Co. 72 12000 (To record receive of notes receivable) 73 74 1-Dec Allowance for Doubtful Accounts 4235 75 Accounts Receivable Kathy Perry 76 4235 (To record write off Allen account) 77 78 79 Note;