Question

The following selected transactions are from Chantay Company.
2010
Dec. 16 Accepted a $14,400, 60-day, 8% note dated this day in granting Adam Bakko a time extension on his past-due account receivable.
31 Made an adjusting entry to record the accrued interest on the Bakko note.
2011
Feb. 14 Received Bakko’s payment of principal and interest on the note dated December 16.
Mar. 2 Accepted an $8,000, 9%, 90-day note dated this day in granting a time extension on the past-due account receivable from Mayday Co.
17 Accepted a $2,200, 30-day, 6% note dated this day in granting Carrie Kadin a time extension on her past-due account receivable.
Apr. 16 Kadin dishonored her note when presented for payment.
June 2 Mayday Co. refuses to pay the note that was due to Chantay Co. on May 31. Prepare the journal entry to charge the dishonored note plus accrued interest to Mayday Co.’s accounts receivable.
July 17 Received payment from Mayday Co. for the maturity value of its dishonored note plus interest for 46 days beyond maturity at 9%.
Aug. 7 Accepted an $8,400, 90-day, 12% note dated this day in granting a time extension on the past-due account receivable of Trenton Co.
Sept. 3 Accepted a $3,335, 60-day, 9% note dated this day in granting Collin Marin a time extension on his past-due account receivable.
Nov. 2 Received payment of principal plus interest from Marin for the September 3 note.
Nov. 5 Received payment of principal plus interest from Trenton for the August 7 note.
Dec. 1 Wrote off the Carrie Kadin account against Allowance for Doubtful Accounts.
Required
1. Prepare journal entries to record these transactions and events. (Round amounts to the nearest dollar.)
Analysis Component
2. What reporting is necessary when a business pledges receivables as security for a loan and the loan is still outstanding at the end of the period? Explain the reason for this requirement and the accounting principle being satisfied.


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  • CreatedMarch 18, 2015
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