Year 1
December 16 Accepted a $10,800, 60-day, 8% note in granting Danny Todd a time extension on his past-due account receivable.
December 31 Made an adjusting entry to record the accrued interest on the Todd note.
Year 2
February 14 Received Todd's payment of principal and interest on the note dated December 16.
March 2
Accepted a $6,100, 8%, 90-day note in granting a time extension on the past-due account receivable from Midnight
Company.
March 17 Accepted a $2,400, 30-day, 7% note in granting Ava Privet a time extension on her past-due account receivable.
April 16 Privet dishonored her note.
May 31 Midnight Company dishonored its note.
August 7 Accepted a $7,440, 90-day, 10% note in granting a time extension on the past-due account receivable of Mulan Company.
September 3 Accepted a $2,100, 60-day, 10% note in granting Noah Carson a time extension on his past-due account receivable.
November 2 Received payment of principal plus interest from Carson for the September 3 note.
November 5 Received payment of principal plus interest from Mulan for the August 7 note.
December 1 Wrote off the Privet account agaidst the Allowance for Doubtful Accounts.
Required:
RS
1-a. First, complete the table below to calculate the interest amount at December 31, Year 1.
1-b. Use the calculated value to prepare your journal entries for Year 1 transactions.
1-c. First, complete the table below to calculate the interest amounts.
1-d. Use those calculated values to prepare your journal entries for Year 2 transactions.
2. If Ohlm pledged its receivables as security for a loan from the bank, where on the financial statements does it disclose this pledge
of receivables?

Question

smro23 smro23

11-06-2022
Business

contestada

Year 1
December 16 Accepted a $10,800, 60-day, 8% note in granting Danny Todd a time extension on his past-due account receivable.
December 31 Made an adjusting entry to record the accrued interest on the Todd note.
Year 2
February 14 Received Todd's payment of principal and interest on the note dated December 16.
March 2
Accepted a $6,100, 8%, 90-day note in granting a time extension on the past-due account receivable from Midnight
Company.
March 17 Accepted a $2,400, 30-day, 7% note in granting Ava Privet a time extension on her past-due account receivable.
April 16 Privet dishonored her note.
May 31 Midnight Company dishonored its note.
August 7 Accepted a $7,440, 90-day, 10% note in granting a time extension on the past-due account receivable of Mulan Company.
September 3 Accepted a $2,100, 60-day, 10% note in granting Noah Carson a time extension on his past-due account receivable.
November 2 Received payment of principal plus interest from Carson for the September 3 note.
November 5 Received payment of principal plus interest from Mulan for the August 7 note.
December 1 Wrote off the Privet account agaidst the Allowance for Doubtful Accounts.
Required:
RS
1-a. First, complete the table below to calculate the interest amount at December 31, Year 1.
1-b. Use the calculated value to prepare your journal entries for Year 1 transactions.
1-c. First, complete the table below to calculate the interest amounts.
1-d. Use those calculated values to prepare your journal entries for Year 2 transactions.
2. If Ohlm pledged its receivables as security for a loan from the bank, where on the financial statements does it disclose this pledge
of receivables?

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anthougo anthougo · Answer 1 · 2022-06-14T21:29:01+02:00

1-a. Completing the table below to calculate the interest amount on December 31, Year 1 is $36.

1-b. Using the calculated value to prepare your journal entries for Year 1 transactions is as follows.

Journal Entries:

December 31 Debit Interest Receivable $36

Credit Interest Revenue $36

To accrue interest revenue to December 31, Year 1.

1-c. Completing the table below to calculate the interest amount on December 31, Year 2 is $600.

1-d. Using the calculated values to prepare journal entries for Year 2 transactions is as follows.

Journal Entries:

Year 2

February 14 Debit Interest Receivable $106

Credit Interest Revenue $106 ($10,800 x 8% x 45/365)

Debit Cash $10,942

Credit Interest Revenue $142

Credit Note Receivable (Danny Todd) $10,800

To record the receipt of Todd's payment of principal and interest on the note dated December 16.

March 2 Debit Note Receivable (Midnight Company) $6,100

Credit Accounts Receivable (Midnight Company) $6,100

To record the acceptance of an 8%, 90-day note, granting a time extension on the past-due account receivable from Midnight

Company.

March 17 Debit Note Receivable (Ava Privet) $2,400

Credit Accounts Receivable (Ava Privet) $2,400

To record the acceptance of a 30-day, 7% note, granting Ava Privet a time extension on her past-due account receivable.

April 16 Debit Accounts Receivable (Ava Privet) $2,414

Credit Note Receivable (Ava Privet) $2,400

Credit Interest Revenue $14

To record that Privet dishonored its note.

May 31 Debit Accounts Receivable (Midnight Company) $6,220

Credit Note Receivable (Midnight Company) $6,100

Credit Interest Revenue $120

To record that Midnight Company dishonored its note.

August 7 Debit Note Receivable (Mulan Company) $7,440

Credit Accounts Receivable (Mulan Company) $7,440

To record the acceptance of a 90-day, 10% note, granting a time extension on the past-due account receivable of Mulan Company.

September 3 Debit Note Receivable (Noah Carson) $2,100

Credit Accounts Receivable (Noah Carson) $2,100

To record the acceptance of a 60-day, 10% note, granting Noah Carson a time extension on his past-due account receivable.

November 2 Debit Cash $2,135

Credit Note Receivable (Noah Carson) $2,100

Credit Interest Revenue $35 ($2,100 x 10% x 60/365)

To record the receipt of payment of principal plus interest from Carson for the September 3 note.

November 5 Debit Cash $7,623

Credit Note Receivable (Mulan Company) $7,440

Credit Interest Revenue $183 ($7,440 x 10% x 90/365)

2. If Ohlm pledged its receivables as security for a loan from the bank, on the financial statements this pledge of receivables will be disclosed on the balance sheet as a current liability or long-term liability, depending on the loan term.

Transaction Analysis and Calculations:

Year 1

December 16 Note Receivable (Danny Todd) $10,800 Accounts Receivable (Danny Todd) $10,800

December 31 Interest Receivable $36 Interest Revenue $36 ($10,800 x 8% x 15/365)

Year 2

February 14 Interest Receivable $106 Interest Revenue $106 ($10,800 x 8% x 45/365)

Cash $10,942 Interest Revenue $142 Note Receivable (Danny Todd) $10,800

March 2

Note Receivable (Midnight Company) $6,100 Accounts Receivable (Midnight Company) $6,100

March 17 Note Receivable (Ava Privet) $2,400 Accounts Receivable (Ava Privet) $2,400

April 16 Accounts Receivable (Ava Privet) $2,414 Note Receivable (Ava Privet) $2,400 Interest Revenue $14

May 31 Accounts Receivable (Midnight Company) $6,220 Note Receivable (Midnight Company) $6,100 Interest Revenue $120

August 7 Note Receivable (Mulan Company) $7,440 Accounts Receivable (Mulan Company) $7,440

September 3 Note Receivable (Noah Carson) $2,100 Accounts Receivable (Noah Carson) $2,100

November 2 Cash $2,135 Note Receivable (Noah Carson) $2,100 Interest Revenue $35 ($2,100 x 10% x 60/365)

November 5 Cash $7,623 Note Receivable (Mulan Company) $7,440 Interest Revenue $183 ($7,440 x 10% x 90/365)

December 1 Allowance for Doubtful Accounts $2,414 Accounts Receivable (Ava Privet) $2,414

Calculation of Interest for Year 2:

Interest Revenue $106

Interest Revenue $142

Interest Revenue $14

Interest Revenue $120

Interest Revenue $35

Interest Revenue $183

Total = $600

Learn more about accruing interests on receivables at https://brainly.com/question/27730151

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