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24 March, 07:45

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. Dec. 31 Adjusted the year-end accounts for the accrued interest earned on the White note. Apr. 30 White honored her note when presented for payment; February has 28 days for the current year.

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  1. 24 March, 08:07
    0
    The adjustments needed for December 31 and April 30 are:

    December 31, journal entry to record accrued interest revenue.

    Dr Interest receivable 80.22

    Cr Accrued interest revenue 80.22

    April 30, note is collected

    Dr Cash 6,236.71

    Dr Accounts receivable 6,000

    Dr Interest receivable 80.22

    Dr Interest revenue 156.49

    Explanation:

    Interest per day = 1/365 x 8% x $6,000 = $1.315 per day

    November has 30 days and December 31 = 61 days x $1.315 per day = $80.22 Total interest charged on the note = 180 days x $1.315 per day = $236.71
  2. 24 March, 08:07
    0
    As at April 30

    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.

    As at November 1

    Account receivable = $6,000 and Note Receivable = $6000

    Dec. 31 Adjusted the year-end accounts for the accrued interest earned on the White note.

    As at December 31

    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.

    As at April 30

    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
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Home » Business » 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. Dec.
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