Tardif Corporation adjusts its books monthly. On September 30, 2015, notes recei
ID: 2414343 • Letter: T
Question
Tardif Corporation adjusts its books monthly. On September 30, 2015, notes receivable include the following Maker Principal Interest Issue Date Mar. 31, 2015 RES Inc May 31, 2015 Ihara Ltd Aug. 31, 2015 Dragon Limited Sept. 30, 2015 MGH Corp $15,400 18,400 4,500 20,600 590 5% 8% 6% Term 7 months 18 months 2 months 16 months Interest is due at maturity for the RES and Dragon notes. Interest is due on the first day of the month for the Ihara and MGH notes. At September 30, the balance in the Allowance for Doubtful Notes account is nil In October, the following selected transactions were completed Oct. 1 31 31 31 31 Received the interest due from Ihara and MGH Received notice that Dragon was unable to pay its note as scheduled. It expects to be able to pay in the future The RES note matured and was received in full Accrued interest on the Ihara and MGH notes Analyzed the remaining notes for collectibility. Estimated that $18,400 of notes may not be collectible in the future because of significant labour issues currently being experienced by Ihara Your answer is partially correct. Try again Calculate the balance in the Interest Receivable and Notes Receivable accounts at September 30, 2015 Round answers to 0 decimal places, e.g. 5,275.)Explanation / Answer
Answers
Notes on which interest is due
Notes Issue date
Principal
Annual Interest
One month interest [interest receivable]
Ihara Ltd
31-May-15
$ 18,400
$ 920
$ 77
MGH Corp
30-Sep-15
$ 20,600
$ 1,236
$ 103
Total Interest receivables
$ 180
No.
Notes Issue date
Principal
Notes matured & Received
Notes matured but not received
Notes Receivable balance
[A]
[B]
[C]
[D = A – B – C]
1
31-Mar-15
$ 15,400
$ 15,400
$ -
2
31-May-15
$ 18,400
$ -
$ 18,400
3
31-Aug-15
$ 4,500
$ -
$ 4,500
$ -
4
30-Sep-15
$ 20,600
$ -
$ 20,600
TOTAL
$ 58,900
$ 15,400
$ 4,500
$ 39,000
Hence, Balance in Notes Receivable = $ 39,000
Dragon Limited Notes Receivable
Amount
$ 4,500
Interest rate
8%
12 Month interest
$ 360
Term
2 months
Interest revenue
$ 60
Total amount receivable on maturity
$ 4,560 [4500 + 60]
Amount received on maturity
$ -
Accounts receivable recorded
$ 4,560
Current Assets:
Notes Receivables
$ 39,000
Less: Allowance for doubtful Notes
18400
$ 20,600
Accounts receivables
$ 4,560
Notes on which interest is due
Notes Issue date
Principal
Annual Interest
One month interest [interest receivable]
Ihara Ltd
31-May-15
$ 18,400
$ 920
$ 77
MGH Corp
30-Sep-15
$ 20,600
$ 1,236
$ 103
Total Interest receivables
$ 180
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