Following are selected transactions for Eduardo Company. Nov. 1 Accepted a $5,00

Question

Following are selected transactions for Eduardo Company. Nov. 1 Accepted a $5,000, 180-day, 6% note dated November 1 from Melosa Allen 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 Allen note. Apr. 30 Allen honors her note when presented for payment; February has 28 days for the current year. First, complete the table below to calculate the interest amounts at December 31st and April 30th. Table: Total through maturity amount accured at Dec. 31 interest recognized April 30 Principal Rate(%) Time Total Interest

Explanation / Answer

Nov. 1
Accepted a $5,000, 180-day, 6% note dated November 1 from Melosa Allen in granting a time extension on her past-due account receivable.
Dr Notes receivable $5,000
Cr Accounts receivable $5,000

Dec. 31
Adjusted the year-end accounts for the accrued interest earned on the Allen note.
Dr Interest receivable $50 ($5,000 x 6% x 60/360)
Cr Interest revenue $50

Apr. 30
Allen honors her note when presented for payment; February has 28 days for the current year
Dr Cash $5,150
Cr Notes receivable $5,000
Cr Interest receivable $50 (int. from Nov 1 to Dec 31 accrued)
Cr Interest revenue $100 (int. from Jan 1 to Apr 30)

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