Following are selected transaction of Danica Company for 2016 and 2017. 2016 Dec
ID: 2511064 • Letter: F
Question
Following are selected transaction of Danica Company for 2016 and 2017.
2016
December 13 Accepted a $16,000, 45-day, 8% note dated December 13 in granting Miranda Lee a time extension on her past-due account receivable.
Dec 31 Prepaid an adjusting entry to record the accured interest on the Lee note
2017.
Jan 27 Received Lee's payment for principal and interest on the note dated December 13.
March 3 Accepted a $10,000, 6%, 90-day note dated March 3 in granting a time extension on the past-due account receivable of Tomas Company.
March 7 Accepted a $8,000, 30-day, 6% note dated March 17 in granting H. Cheng a time extension on his past-due account receivable
April 16 H. Cheng dishonored his note when presented for payment
May 1 Wrote off the H. Cheng account against the Allowance for Doubtful Accounts.
June 1 Received the Tomas payment for principal and interest on the note dated March 3.
Complete the table to calculate the interests amounts and use those calculated values to prepare your journal entries
(Do not round intermediate calculations. use 360 days a year)
M Lee Note-Complete the table to calculate the interest amounts. (Total through maturity- Amount Accrued at December 31-Interest Recognized January 27)
Tomas Co Note and H. Cheng Note
Complete the table to calculate the interest amount on Both companies. (Principal, Rate %, Time, Total Interest) Then use the calculated values to prepare your journal entries. PLEASE SHOW YOUR WORK
Explanation / Answer
M.Lee Note total Amount interest through accrued at Recognized Maturity 31-Dec 27-Jan Principal 16,000 16,000 16,000 Rate(%) 8% 8% 8% time 45/360 18/360 27/360 total intt 160 64 96 Tomas co Note total through Maturity Principal 10,000 Rate(%) 6% time 90/360 total intt 150 H.Cheng note total through Maturity Principal 8,000 Rate(%) 6% time 30/360 total intt 40 Journal Entries Date General Journal Debit Credit 2017 27-Jan Cash 16,160 interest receivable 64 interest income 96 Note receivable 16,000 3-Mar Note receivable 10,000 Account receivable-Tomas 10,000 17-Mar Note receivable 8,000 Account receivable-H.Cheng 8,000 16-Apr Account receivable-H.Cheng 8,040 interest income 40 note receivable 8,000 1-May Allowance for Doubtful Accounts 8,040 Accounts receivable-H.Cheng 8,040 1-Jun Cash 10,150 interest income 150 note receivable 10,000 journal entries for year 2016 if required Date General Journal Debit Credit 13-Dec Note receivable 16,000 Accounts receivable 16,000 31-Dec interest receivable 64 interest income 64