Question

Following are selected transactions of Danica Company for 2016.

Dec.		13		Accepted a $17,000, 45-day, 9% 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.

Complete the table to calculate the interest amounts at December 31^st and use the calculated value to prepare your journal entries. (Do not round your intermediate calculations. Use 360 days a year.)

Answer 1

		Interest
	Total through	Recognized
	Maturity	December 31
Principal	17000	17000
Rate (%)	9%	9%
Time	45/360	18/360
Total Interest	191	77
Date		Debit	Credit
Dec 13	Notes Receivable-M. Lee	17000
	Accounts Receivable-M. Lee		17000
Dec 31	Interest Receivable	77
	Interest revenue		77
Note: Amount have been rounded off to nearest dollar