Singletary company had the following select trasactions: 2008 1) Apr. 1, 2008 Ac
ID: 2443470 • Letter: S
Question
Singletary company had the following select trasactions:2008
1) Apr. 1, 2008 Accepted Wilson Company's 1-year, 12% note in settlement of a $16,500 account receivable.
2) July 1, 2008 Loaned $24,800 cash to Richard Dent on a 9-month, 10% note.
3) Dec. 31, 2008 Accrued interest on all notes receivable.
4) Apr. 1, 2009 Received principal plus interest on the Wilson note.
5) Apr. 1, 2009 Richard Dent dishonored its note; Singletary expects it will eventually collect.
Instructions
Prepare journal entries to record the transactions. Singletary prepares adjusting entries once a year on December 31.
I solved them all expect for the last one #5. What is the amount of account receivable and please explain why?? thanks
Explanation / Answer
July 1, 2008 Loaned $24,800 cash to Richard Dent on a 9-month, 10% note. 5) Apr. 1, 2009 Richard Dent dishonored its note; Singletary expects it will eventually collect. The Note is having a value of $24,800 plus interest of 9 months @10% is due. Hence the entry for dishonour will be made as under: Accounts receivable $26,660 Note receivable $24,800 Interest accrued $ 1,240 (Interest for six months upto 31st Dec.2008) Interest revenue $ 620 (Interest for three months for Jan - Mar 2009)