Question Completion:
Dec. 13 Accepted a $9,500, 45-day, 8% note dated December 13 in granting Miranda Lee a time extension on her past-due account receivable.
Answer:
Journal Entries:
Jan. 27 Debit Cash $9,595
Credit Notes Receivable (Miranda Lee) $9,500
Credit Interest Revenue $95
To record the full settlement of note and interest.
Mar. 3 Debit Notes Receivable (Tomas Company) $5,000
Credit Accounts Receivable (Tomas Company) $5,000
To record the acceptance of a 10%, 90-day note.
17 Debit Notes Receivable (H. Cheng) $2,000
Credit Accounts Receivable (H. Cheng) $2,000
To record the acceptance of a 30-day, 9% note
Apr. 16 Debit Accounts Receivable (H. Cheng) $2,015
Credit Notes Receivable (H. Cheng) $2,000
Credit Interest Revenue $15
To record the dishonoring of Cheng's note.
May 1 debit Allowance for Doubtful Accounts $2,105
Credit Accounts Receivable (H. Cheng) $2,015)
To record the write-off of H. Cheng's account.
June 1 Debit Cash $5,125
Credit Notes Receivable (Tomas Company) $5,000
Credit Interest Revenue $125
To record the full settlement of Tomas' account.
Explanation:
a) Data and Calculations:
Jan. 27 Cash $9,595 Notes Receivable (Miranda Lee) $9,500 Interest Revenue $95
Mar. 3 Notes Receivable (Tomas Company) $5,000 Accounts Receivable (Tomas Company) $5,000, 10%, 90-day note
17 Notes Receivable (H. Cheng) $2,000 Accounts Receivable (H. Cheng) $2,000 30-day, 9% note
Apr. 16 Accounts Receivable (H. Cheng) $2,015 Notes Receivable (H. Cheng) $2,000 Interest Receivable $15
May 1 Allowance for Doubtful Accounts $2,105 Accounts Receivable (H. Cheng) $2,015)
June 1 Cash $5,125 Notes Receivable (Tomas Company) $5,000 Interest Revenue $125
Interest amounts
