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ACC-1A Lecture Notes - Lecture 15: Accounts Receivable, General Ledger, Financial Statement

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lemonwasp425
8 Sep 2020
School
RCC
Department
Accounting
Course
ACC-1A
Professor
Rangel

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Document Summary

Time extension on accounts receivable and collect on oct. 1, mr. john green, a good customer, purchases of merchandise on account, no terms are offered. An accounts receivable is recorded with payment expected as usual in. Time extension on accounts receivable (that is owed at year-end) and collect . Change up the facts on the agreement with mr. green. On oct 30, mr. green walks into the store and announces that he is unable to pay the ,000 right now but he will be able to pay in 90 days. Mr. green is asked to sign a 90 day note with interest of 6%. The amount owed is reclassified from an accounts receivable to a note receivable. If a note receivable is owed to the company at year-end . the interest earned during the year is accrued (record the interest revenue that has been earned).

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Related Questions

Problem 9-5A Analyzing and journalizing notes receivable transactions LO C2, C3, P4

The following selected transactions are from Ohlm Company. (Use 360 days a year.)

2016

Dec. 16 Accepted a $10,200, 60-day, 7% note dated this day in granting Danny Todd a time extension on his past-due account receivable.
31 Made an adjusting entry to record the accrued interest on the Todd note.


2017

Feb. 14 Received Todd’s payment of principal and interest on the note dated December 16.
Mar. 2 Accepted a(n) $7,700, 7%, 90-day note dated this day in granting a time extension on the past-due account receivable from Midnight Co.
17 Accepted a(n) $2,100, 30-day, 7% note dated this day in granting Ava Privet a time extension on her past-due account receivable.
Apr. 16 Privet dishonored her note when presented for payment.
May 31 Midnight Co. refused to pay the note that was due to Ohlm Co. on May 31. Prepare the journal entry to charge the dishonored note plus accrued interest to Midnight Co.'s accounts receivable.
July 16 Received payment from Midnight Co. for the maturity value of its dishonored note plus interest for 46 days beyond maturity at 7%.
Aug. 7 Accepted a(n) $7,700, 90-day, 12% note dated this day in granting a time extension on the past-due account receivable of Mulan Co.
Sep. 3 Accepted a(n) $2,350, 60-day, 9% note dated this day in granting Noah Carson a time extension on his past-due account receivable.
Nov. 2 Received payment of principal plus interest from Carson for the September 3 note.
Nov. 5 Received payment of principal plus interest from Mulan for the August 7 note.
Dec. 1 Wrote off the Privet account against the Allowance for Doubtful Accounts.


Required:
1-a. First, complete the table below to calculate the interest amount at December 31, 2016.
1-b. Use the calculated value to prepare your journal entries for 2016 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 2017 transactions.

Required 1A

First, complete the table below to calculate the interest amount at December 31, 2016.
Total Through Maturity Interest Recognized December 31
Principal
Rate (%)
Time
Total interest

Required 1B

Use the calculated value to prepare your journal entries for 2016 transactions.

Journal entry worksheet

Accepted a $10,200, 60-day, 7% note dated this day in granting Danny Todd a time extension on his past-due account receivable.

Note: Enter debits before credits.

Made an adjusting entry to record the accrued interest on the Todd note.

Required 1C

First, complete the table below to calculate the interest amounts.
Total Through Maturity
Midnight Co. Note - March 2, 2017 A. Privet Note - March 17, 2017 Mulan Note - August 7, 2017 Midnight Co. Note - May 31, 2017 N. Carson Note - September 3, 2017
Principal
Rate (%)
Time

Required 1D

Use those calculated values to prepare your journal entries for 2017 transactions.

Journal entry worksheet

.....

1. Received Todd’s payment of principal and interest on the note dated December 16.

2. Accepted a $7,700, 7%, 90-day note dated this day in granting a time extension on the past-due account receivable from Midnight Co.

3. Accepted a $2,100, 30-day, 7% note dated this day in granting Ava Privet a time extension on her past-due account receivable.

4. Privet dishonored her note when presented for payment.

5. Midnight Co. refused to pay the note that was due to Ohlm Co. on May 31. Prepare the journal entry to charge the dishonored note plus accrued interest to Midnight Co.’s accounts receivable.

6. Received payment from Midnight Co. for the maturity value of its dishonored note plus interest for 46 days beyond maturity at 7%.

7. Accepted a $7,700, 90-day, 12% note dated this day in granting a time extension on the past-due account receivable of Mulan Co.

8. Accepted a $2,350, 60-day, 9% note dated this day in granting Noah Carson a time extension on his past-due account receivable.

9. Received payment of principal plus interest from Carson for the September 3 note.

10. Received payment of principal plus interest from Mulan for the August 7 note.

11. Wrote off the Privet account against Allowance for Doubtful Accounts.

The following selected transactions are from OhlmeyerCompany.

2012

Dec. 16 Accepted a $10,800, 60-day, 8% note dated this day ingranting Danny Todd a time extension on his past-due accountreceivable.

Dec. 31 Made an adjusting entry to record the accrued intereston the Todd note.

2013

Feb. 14 Received Todays payment of principal and interest on thenote dated December 16.

Mar. 2 Accepted an $6,100, 8%, 90-day note dated this day ingranting a time extension on the past-due account receivable fromMidnight Co.

Mar.17 Accepted a $2,400, 30-day, 7% note dated this day ingranting Ava Privet a time extension on her past-due accountreceivable.

Apr. 16 Privet dishonored her note when presented for payment.June 2 Midnight Co. refuses to pay the note that was due toOhlmeyer Co. on

May 31. Prepare the journal entry to charge the dishonored noteplus accrued interest to Midnight Co.s accounts receivable.

July 17 Received payment from Midnight Co. for the maturityvalue of its dishonored note plus interest for 46 days beyondmaturity at 8%.

Aug. 7 Accepted an $7,450, 90-day, 10% note dated this day ingranting a time extension on the past-due account receivable ofMulan Co. Sept. 3 Accepted a $2,100, 60-day, 10% note dated thisday in granting Noah Carson a time extension on his past-dueaccount receivable.

Nov. 2 Received payment of principal plus interest from Carsonfor the September 3 note.

Nov. 5 Received payment of principal plus interest from Mulanfor the August 7 note.

Dec. 1 Wrote off the Privet account against Allowance forDoubtful Accounts

Open the following selected accounts recording the opening balances as of January 1 of the current year.

114.1

Allowance for doubtful accounts

12,200 Credit

313

Income summary

718

Bad debts expense

3.Record the following transactions in general journal form in the Group Project Excel Spreadsheet Problem 2 Parts 2 - 6 tab.

4.Post these transactions to the three selected accounts above and to Accounts receivable.

5.Enter the ending balances in the three accounts above and enter the ending balance in the Accounts Receivable account.

Apr 1, 09

Accepted a $20,000, one - year, 8% note dated April 1 from Bruce Hanson for the sale of inventory; Cost of Goods Sold was $16,500.

June 27

Wrote off the $2,375 balance owed by Miller Corp., which has no assets.

Oct. 5

Received 25% of the $12,000 balance owed by F.M. Knox Co., a bankrupt, and wrote off the remainder as uncollectible.

Dec. 31

Based on an analysis of the $257,724 of accounts receivable, it was estimated that $14,500 will be uncollectible. Record the adjusting entry using the Aging method.

Dec. 31

Record the adjusting entry for interest accrued on the Bruce Hanson note

Dec. 31

Record the entries to close the appropriate accounts into Retained Earnings.

April 1, 10

Collected the maturity value on the Hanson note.

6.Determine the net accounts receivable (the amount Summer expects to collect as of December 31.

7.Compute the accounts receivable turnover and the day’s sales in receivables for the year. Assume that there were $1,800,000 sales account.

8.How is Summer Company doing with collection of their accounts receivable compared to the industry? Assume the industry average for the accounts receivable turnover is 11 and the industry average for the day’s sales in receivables is 37 days?