Accepted a $27,000, 45-day, 10% note dated December 13 in granting Latisha Clark
ID: 2375046 • Letter: A
Question
Accepted a $27,000, 45-day, 10% note dated December 13 in granting Latisha Clark a time extension on her past-due account receivable.
Prepared an adjusting entry to record the accrued interest on the Clark note.
Received Clark%u2019s payment for principal and interest on the note dated December 13.
Accepted a $21,000, 7%, 90-day note dated March 3 in granting a time extension on the pastdue account receivable of Shandi Company.
Accepted a $19,000, 30-day, 9% note dated March 17 in granting Juan Torres a time extension on his past-due account receivable.
Torres dishonors his note when presented for payment.
Wrote off the Torres account against the Allowance for Doubtful Accounts.
Received the Shandi payment for principal and interest on the note dated March 3.
Prepare journal entries for the above transactions for 2011. (Use 360 days a year. Do not round intermediate calculations and round your final answers to nearest dollar amount. Omit the "$" sign in your response.)
Explanation / Answer
Following are selected transactions Deshawn Company for 2010 and 2011.
2010
Dec. 13 Accepted a $27,000, 45-day, 10% note dated December 13 in granting Latisha Clark a time extension on her past-due account receivable.
13Dec2010 Note Rxable Dr 27000
Acct Rx (Clark) Cr 27000
Dec 31 Prepared an adjusting entry to record the accrued interest on the Clark note.
31 Dec2010 Interest Rxable Dr $135
Interset Revenue Cr $135
(Int = 27000*10%*45/360*(31-13) = $135)
2011
Jan. 27 Received Clark%u2019s payment for principal and interest on the note dated December 13.
27Jan2011 Cash Dr 27338
Note Rxable Cr 27000
Int Rxable Cr 135
Int Revenue Cr 203
(Int on 27000*10%*45/360 = 338)
Mar. 3 Accepted a $21,000, 7%, 90-day note dated March 3 in granting a time extension on the pastdue account receivable of Shandi Company.
3Mar Note Rxable Dr 21000
Acct Rx (Shandi) Cr 21000
Mar 17 Accepted a $19,000, 30-day, 9% note dated March 17 in granting Juan Torres a time extension on his past-due account receivable.
17Mar Note Rxable Dr 19000
Acct Rx (Juan) Cr 19000
Apr.16 Torres dishonors his note when presented for payment.
16AprAcct Rxable (Juan) Dr 19143
Int Income Cr 143
Note Rxable Cr 19000
(Int = 19000*9%*30/360 = 143)
May 1 Wrote off the Torres account against the Allowance for Doubtful Accounts.
1May Bad Debt Exp Dr 19143
Acct Rxable (Juan) Cr 19143
June 1 Received the Shandi payment for principal and interest on the note dated March 3.
1Jun Cash Dr 27368
Note Rxable Cr 27000
Int Revenue Cr 368
(Int on 21000*7%*90/360 = 368)