Exercise 8-12 Vandiver Company had the following select transactions. Apr. 1, 20

Question

Exercise 8-12

Vandiver Company had the following select transactions.

Apr. 1, 2014 Accepted Goodwin Company’s 12-month, 16% note in settlement of a $41,800 account receivable. July 1, 2014 Loaned $43,800 cash to Thomas Slocombe on a 9-month, 14% note. Dec. 31, 2014 Accrued interest on all notes receivable. Apr. 1, 2015 Received principal plus interest on the Goodwin note. Apr. 1, 2015 Thomas Slocombe dishonored its note; Vandiver expects it will eventually collect. -repare Journal entres to record the tra nsactions, vandi prepares adjusting entres once a year on Dece m Der 31. automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Deblt Credit 4/1/2015 7/1/2015 12/31/2015 (To record interest at 16%) (To record interest at 14%) 4/1/2016 To record collection and interest)

Explanation / Answer

Date

Account Titles and Explanation

Debit

Credit

4/1/2014

Note Receivable

41800

Accounts Receivable

41800

7/1/2014

Note Receivable

43800

Cash

43800

12/31/2014

Note receivable

5016

Interest revenue

5016

(41800*16%*9/12 = 5016)

To record interest at 16%

Note Receivable

3066

Interest revenue

3066

(43800*14%*6/12 = 3066)

To record interest at 14%

4/1/2015

Cash

48488

Interest revenue

1672

(41800*16%*3/12 = 1672)

Note receivable

46816

To record collection and interest

Thomas Slocombe

48538

Interest revenue

1672

(43800*14%*3/12 = 1533)

Note receivable

46866

(To record the dishonor)

Date

Account Titles and Explanation

Debit

Credit

4/1/2014

Note Receivable

41800

Accounts Receivable

41800

7/1/2014

Note Receivable

43800

Cash

43800

12/31/2014

Note receivable

5016

Interest revenue

5016

(41800*16%*9/12 = 5016)

To record interest at 16%

Note Receivable

3066

Interest revenue

3066

(43800*14%*6/12 = 3066)

To record interest at 14%

4/1/2015

Cash

48488

Interest revenue

1672

(41800*16%*3/12 = 1672)

Note receivable

46816

To record collection and interest

Thomas Slocombe

48538

Interest revenue

1672

(43800*14%*3/12 = 1533)

Note receivable

46866

(To record the dishonor)

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