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Following are selected transactions for Ridge Company.

Mar. 21 Accepted a $9,500, 180-day, 8% note dated March 21 from Tamara Jackson in granting a time extension on her past-due account receivable.

Sept. 17 Jackson dishonors her note when it is presented for payment.

Dec. 31 After exhausting all legal means of collection, Ridge Company writes off Jacksons account against the Allowance for Doubtful Accounts.

First, complete the table below to calculate the interest amounts at September 17. (Use 360 days a year.)

Accepted a $9,500, 180-day, 8% note dated March 21 from Tamara Jackson in granting a time extension on her past-due account receivable.

Respuesta :

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Answer:

1) Calculating the interest amount at September 17, (using 360 days a year)

                           Total Through Maturity

Principal              $9,500

Rate                    8%

Time                   180/360

Total Interest      $380

2) Preparing the Journal Entries for above transactions

Date                            General Journal                        Debit             Credit

Mar 21              Notes receivable-T Jackson              $9,500

                         Account receivable-T Jackson                                 $9,500

Sept 17             Accounts receivable-T Jackson         $9,880

                        Notes receivable-T Jackson                                      $9,500

                        Interest Revenue                                                        $380

Dec 31              Allowance for Doubtful Accounts       $9880

                        Accounts receivable-T Jackson                                $9,880

Explanation:

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