Apr. 1, 2011 Accepted Wilson Company's 1-year, 12% note in settlement of a $19,300 account receivable.
Dr Notes Receivable 19,300
Cr Accounts Receivable 19,300
July 1, 2011 Loaned $24,300 cash to Richard Dent on a 9-month, 11% note.
Dr Notes Receivable 24,300
Cr Cash 24,300
Dec. 31, 2011 Accrued interest on all notes receivable.
19,300 x 12% x 9/12 = 1,737
And
24,300 x 11% x 6/12 = 1,336.50
Dr Interest Receivable 3,073.50
Cr Interest Revenue 3,073.50
Apr. 1, 2012 Received principal plus interest on the Wilson note.
19,300 x 12% x 3/12 = 579 accrued interest
Dr Cash 21,616
Cr Notes Receivable 19,300
Cr Interest Receivable 1,737
Cr Interest Revenue 579
Apr. 1, 2012 Richard Dent dishonored its note; Singletary expects it will eventually collect.
24,300 x 11% x 3/12 = 668.25 accrued interest
Dr Account Receivable 26,304.75
Cr Notes Receivable 24,300
Cr Interest Recivable 1,336.50
Cr Interest Revenue 668.25

Member since:
June 02, 2011
Total points:
98,045 (Level 7)
a)
Maturity date: May 31
Total interest = [ $ 600,000 x 0.09 x (60/360) ] = $ 9,000
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b)
Maturity date: August 1

Interest = Principal x Rate x Time

Rate = [ Interest / (Principal x Time) ]

= [ 600 / (90,000 x (30/360) ]

= [ 600 / 7,500 ]

= 0.08

= 8%
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c)
Maturity date: September 7
Total interest = [ $ 120,000 x 0.10 x (180/360) ] = $ 6,000