Exercise 7-11 Notes receivable transactions LO P3 Following are selected transac

Question

Exercise 7-11 Notes receivable transactions LO P3 Following are selected transactions Danica Company for 2014 and 2015 2014 Dec. 13 Accepted a $14,000, 45-day, 8% note dated December 13 in granting Miranda Lee a time extension on her past-due account receivable Prepared an adjusting entry to record the accrued interest on the Lee note 31 2015 Jan. 27 Received Lee's payment for principal and interest on the note dated December 13 Mar. 3 Accepted a $8,000, 8%, 90-day note dated March 3 in granting a time extension on the past-due account receivable of Tomas Company. 17 Accepted a $6,000, 30-day, 8% note dated March 17 in granting H Cheng a time extension on his past-due account receivable Apr. 16 H. Cheng dishonors his note when presented for payment. Wrote off the H. Cheng account against the Allowance for Doubtful May1 Accounts Received the Tomas payment for principal and interest on the note June 1 dated March3 First, complete the table below to calculate the interest amounts. (Do not round intermediate calculations and round your final answers to nearest whole dollar. Use 360 days a year.) M. Lee Note Amount Through Accrued at Recognized otal nterest Maturit December 31January 27 Principal Rate (%) Time Total interest Tomas Co Note Total Through Maturity Principal Rate (%) Time Total interest

Explanation / Answer

M.Lee Note total Amount interest through accrued at Recognized Maturity 31-Dec 27-Jan Principal 14,000 14,000 14,000 Rate(%) 8% 8% 8% time 45/360 18/360 27/360 total intt 140 56 84 Tomas co Note total through Maturity Principal 8,000 Rate(%) 8% time 90/360 total intt 160 H.Cheng note total through Maturity Principal 6,000 Rate(%) 8% time 30/360 total intt 40 Journal Entries Date                  General Journal                     Debit Credit 2015 27-Jan Cash 14,140 interest receivable 56 interest income 84 Note receivable 14,000 3-Mar Note receivable 8,000 Account receivable-Tomas 8,000 17-Mar Note receivable 6,000 Account receivable-H.Cheng 6,000 16-Apr Account receivable-H.Cheng 6,040 interest income 40 note receivable 6,000 1-May Allowance for Doubtful Accounts 6,040 Accounts receivable-H.Cheng 6,040 1-Jun Cash 8,160 interest income 160 note receivable 8,000

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