Question

GL0701 - Based on Problem 7-5A LO C2, C3, P4 The following selected transactions are from Gonzalez Company. Year 1 Dec. 16 Accepted a $15,600, 60-day, 100 note in granting Lindsey Martin a time extension on his past-due account receivable. 31 Made an adjusting entry to record the accrued interest on the Martin note. Year 2 Feb. 14 Received Martin's payment of principal and interest on the note dated December 16. Mar. 2 Accepted a $10,000, 100, 90-day note in granting a time extension on the past-due account receivable from Hall Co. 17 Accepted a $4,800, 30-day, 78 note in granting Carlos Sanchez a time extension on her past-due account receivable. Apr. 16 Sanchez dishonored her note. May 31 Hall Co. dishonored ita note. Aug. 7 Accepted a $14,000, 90-day, 108 note in granting a time extension on the past-due account receivable of Mitchell Co. Sep. 3 Accepted a $6,600, 60-day, 108 note in granting Than Nguyen a time extension on his past-due account receivable. Nov. 2 Received payment of principal plus interest from Nguyen for the September 3 note. Nov. 5 Received payment of principal plus interest from Mitchell for the August 7 note. Dec. 1 Wrote off the Sanchez 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 Gonzalez Co. Calculation of interest tab - Use the interest formula (P xRxT) to verify the amount of interest recorded in your entries.

Answer 1

In the books of Gonzalez Company:

Date	General Journal	Debit	Credit
Year 1		$	$
Dec 16	Note Receivable : Lindsey Martin	15,600
	Accounts Receivable		15,600
Dec 31	Interest Receivable [( 15,600 x 10 % ) / 360] * 15	65
	Interest Revenue		65
Year 2
Feb 14	Cash	15,860
	Note Receivable : Lindsey Martin		15,600
	Interest Receivable		65
	Interest Revenue		195
Mar 2	Note Receivable : Hall Co.	10,000
	Accounts Receivable		10,000
Mar 17	Note Receivable : Carlos Sanchez	4,800
	Accounts Receivable		4,800
Apr 16	Accounts Receivable	4,828
	Note Receivable : Carlos Sanchez		4,800
	Interest Revenue ( 4,800 x 7 % x 30/360)		28
May 31	Accounts Receivable	10,250
	Note Receivable : Hall Co.		10,000
	Interest Revenue ( 10,000 x 10 % x 90/360)		250
Aug 7	Note Receivable : Mitchell Co.	14,000
	Accounts Receivable		14,000
Sep 3	Note Receivable : Than Nguyen	6,600
	Accounts Receivable		6,600
Nov 2	Cash	6,710
	Note Receivable: Than Nguyen		6,600
	Interest Revenue ( 6,600 x 10% x 60 / 360)		110
Nov 5	Cash	14,350
	Note Receivable: Mitchell Co.		14,000
	Interest Revenue		350
Dec 1	Allowance for Doubtful Accounts	4,828
	Accounts Receivable		4,828