Answer:
<u>As at April 30</u>
Dr. Account Receivable (120 days / 180 days x 6000 x 0.08) ..$320
Cr. Interest Income......................................................................................$320
Being accrued interest Income for current year to date on note receivable
Dr. Bank..............................................................................................$6,483
Cr. Accounts Receivable ($6000 note receivable + $163 + $320)...$6,483
Being settlement of note receivable with total accrued interest Income
Explanation:
Following are selected transactions for Vitalo Company.
Nov. 1 Accepted a $6,000, 180-day, 8% note dated November 1 from Kelly White in granting a time extension on her past-due account receivable.
<u>As at November 1</u>
Account receivable = $6,000 and Note Receivable = $6000
Dec. 31 Adjusted the year-end accounts for the accrued interest earned on the White note.
<u>As at December 31</u>
Dr. Account Receivable (61 days /180 days x 6000 x 0.08) ..$163
Cr. Interest Income......................................................................................$163
Apr. 30 White honored her note when presented for payment; February has 28 days for the current year.
<u>As at April 30</u>
Dr. Account Receivable (120 days / 180 days x 6000 x 0.08) ..$320
Cr. Interest Income......................................................................................$320
Being accrued interest Income for current year to date on note receivable
Dr. Bank..............................................................................................$6,483
Cr. Accounts Receivable ($6000 note receivable + $163 + $320)...$6,483
Being settlement of note receivable with total accrued interest Income
