Question

Check Det Revenue 838 Refer to the information in Exercise 7-11 and prepare the journal entries for the following selected trans actions of Danica Company for 2017 Exercise 7-12 Notes receivable transactions P4 2017 Check Tart a Jan. 27 Received Lee's payment for principal and interest on the note dated December 13. Mar. 3 Accepted a $5.000, 10%, 90-day note dated March 3 in granting a time extension on the past due account receivable of Tomas Company 17 Accepted a $2.000, 30-day, 9% note dated March 17 in granting H. Cheng a time extens his past-due account receivable. Apr. 16 Cheng dishonored his note when presented for payment. May Wrote off the Cheng account against the Allowance for Doubtful Accounts. June 1 Received the Tomas payment for principal and interest on the note dated March 3. $9.595 June $5,125 Prepare journal entries to record these selected transactions for Vitalo Company (assume that no reversing entries are recorded). Exercise 7-13 Honoring a note P4 Nov. 1 Accepted a $6,000, 180-day, 8% note dated November 1 from Kelly White in granting a time extension on her past-due account receivable. Dec. 31 Adjusted the year-end accounts for the accrued interest earned on the White note. Apr. 30 White honored her note when presented for payment; February has 28 days for the current year. CASIO BEGAARD SL-300VC TWO WAY POWER REWRDING END-OF-porin

exercise 7-13

Answer 1

Solution:

Exercise 7-13

Journal entries:

No.of Event	Date	Account title and Explanation	Debit ($)	Credit ($)
1.)	Nov.1	Notes receivable - K White	6,000
		Account receivable - K White		6,000
		(To record a time extension)
2.	Dec.31	Interest receivable	80
		Interest revenue		80
		(To record interest earned)
3.	Apr.30	Cash	6,240
		Interest receivable		80
		Interest revenue		160
		Notes receivable - K White		6,000
		(To record cash received on note)

Explanation:

Dec. 31 To record interest earned

$6000 × 0.08 × 60/360 =$80

Apr. 30 To record cash received on note plus interest earned

$6000 × 0.08 × 120/360 =160