Question

Exercise 7-12 Notes receivable transactions LO P4 Following are selected transactions of Danica Company for 2016 and 2017. 2016 Dec. 13 Accepted a $26,000, 45-day, 10% note dated December 13 in granting Miranda Lee a time extension on her past-due account receivable 31 Prepared an adjusting entry to record the accrued interest on the Lee note. 2017 Jan. 27 Received Lee's payment for principal and interest on the note dated December 13. Mar. 3 Accepted a $20,000, 8%, 90-day note dated March 3 in granting a time extension on the past-due account receivable of Tomas Company. 17 Accepted a $18,000, 30-day, 8% note dated March 17 in granting H. Cheng a time extension on his past-due account receivable Apr. 16 H. Cheng dishonored his note when presented for payment. May 1 Wrote off the H. Cheng account against the Allowance for Doubtful Accounts. June 1 Received the Tomas payment for principal and interest on the note dated March 3. Complete the table to calculate the interest amounts and use those calculated values to prepare your journal entries. (Do not round intermediate calculations. Use 360 days a year.) Answer is not comnlete

Answer 1

M.Lee Note
	total	Amount	interest
	through	accrued at	Recognized
	Maturity	31-Dec	27-Jan
Principal	26,000	26,000	26,000
Rate(%)	10%	10%	10%
time	45/360	18/360	27/360
total intt	325	130	195
Tomas co Note
	total
	through
	Maturity
Principal	20,000
Rate(%)	8%
time	90/360
total intt	400
H.Cheng note
	total
	through
	Maturity
Principal	18,000
Rate(%)	8%
time	30/360
total intt	120
Journal Entries
Date	General Journal				Debit	Credit
2016
13-Dec	Note receivable				26,000
	Accounts receivable					26,000
31-Dec	interest receivable				130
	interest income					130
2017
27-Jan	Cash				26,325
	interest receivable					130
	interest income					195
	Note receivable -M lee					26,000
3-Mar	Note receivable				20,000
	Account receivable-Tomas					20,000
17-Mar	Note receivable				18,000
	Account receivable-H.Cheng					18,000
16-Apr	Account receivable-H.Cheng				18,120
	interest income					120
	note receivable					18,000
1-May	Allowance for Doubtful Accounts				18,120
	Accounts receivable-H.Cheng					18,120
1-Jun	Cash				20,400
	interest income					400
	note receivable-tomas					20,000