The following selected transactions are from Springer Company.
Nov. 1 Accepted a $ 4,800, 90-day, 8% note dated this day in granting Steve Julian a time extension on his past-due account receivable.
Dec. 31 Made an adjusting entry to record the accrued interest on the Julian note.
Jan. 30 Received Julian’s payment for principal and interest on the note dated November 1.
Feb. 28 Accepted a $ 12,600, 8%, 30-day note dated this day in granting a time extension on the past-due account receivable from King Co.
Mar. 1 Accepted a $ 6,200, 60- day, 12% note dated this day in granting Myron Shelley a time extension on his past-due account receivable. 30 The King Co. dishonored its note when presented for payment.
April 30 Received payment of principal plus interest from M. Shelley for the March 1 note.
June 15 Accepted a $ 2,000, 72-day, 8% note dated this day in granting a time extension on the past- due account receivable of Ryder Solon.
21 Accepted a $ 9,500, 90-day, 8% note dated this day in granting J. Felton a time extension on his past- due account receivable.
Aug. 26 Received payment of principal plus interest from R. Solon for the note of June 15.
Sep. 19 Received payment of principal plus interest from J. Felton for the June 21 note.
Nov. 30 Wrote off King’s account against Allowance for Doubtful Accounts.
1. Prepare journal entries to record these transactions and events. (Round amounts to the nearest dollar.)
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.