Following are selected transactions Deshawn Company for 2010 and 2011. Accepted
ID: 2478599 • Letter: F
Question
Following are selected transactions Deshawn Company for 2010 and 2011.
Accepted a $14,000, 45-day, 8% 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’s payment for principal and interest on the note dated December 13.
Accepted a $8,000, 6%, 90-day note dated March 3 in granting a time extension on the past-due account receivable of Shandi Company.
Accepted a $6,000, 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.
First, complete the table below to calculate the interest amounts.
A..clark note
principal
rate(%)
Time
Interest
Next to principal there is two columns:
1.Amount accrued on Dec 31
2.Interested on Jan 27
B..Shandi Company Note
Principal
rate(%)
time
total interest
Next to Principal there is two columns
1.Total Maturity
2,Interested recognized June 1
c.Torres note
Principal
Rate(%)
Time
Total Interest
Next to Principal there is two columns:
1.Total Maturity
2.Interested recognized April 16
Explanation / Answer
Answer:
Jan. 27 $14,000 *0.08 (45-18) / 360 = 84
Apr. 16 $6,000* 0.09* 30 / 360 = 45
June1 $8,000 *0.06 *90 / 360 = 120