Problem 7-5A (Static) Analyzing and journalizing notes receivable transactions LO C2, C3, P4

The following transactions are from Ohlm Company. (Use 360 days a year.) Year 1

Dec.		16		Accepted a $10,800, 60-day, 8% note in granting Danny Todd a time extension on his past-due account receivable.
		31		Made an adjusting entry to record the accrued interest on the Todd note.

Year 2

Feb.		14		Received Todds payment of principal and interest on the note dated December 16.
Mar.		2		Accepted a $6,100, 8%, 90-day note in granting a time extension on the past-due account receivable from Midnight Co.
		17		Accepted a $2,400, 30-day, 7% note in granting Ava Privet a time extension on her past-due account receivable.
Apr.		16		Privet dishonored her note.
May		31		Midnight Co. dishonored its note.
Aug.		7		Accepted a $7,440, 90-day, 10% note in granting a time extension on the past-due account receivable of Mulan Co.
Sep.		3		Accepted a $2,100, 60-day, 10% note in granting Noah Carson a time extension on his past-due account receivable.
Nov.		2		Received payment of principal plus interest from Carson for the September 3 note.
Nov.		5		Received payment of principal plus interest from Mulan for the August 7 note.
Dec.		1		Wrote off the Privet account against the Allowance for Doubtful Accounts.

Required: 1-a. First, complete the table below to calculate the interest amount at December 31, Year 1. 1-b. Use the calculated value to prepare your journal entries for Year 1 transactions. 1-c. First, complete the table below to calculate the interest amounts. 1-d. Use those calculated values to prepare your journal entries for Year 2 transactions. 2. If Ohlm pledged its receivables as security for a loan from the bank, where on the financial statements does it disclose this pledge of receivables?

1A

First, complete the table below to calculate the interest amount at December 31, Year 1.

	Total through maturity	Interest recognized December 31
Principal
Rate (%)
Time
Total interest

1B

Use the calculated value to prepare your journal entries for Year 1 transactions

-Accepted a $10,800, 60-day, 8% note in granting Danny Todd a time extension on his past-due account receivable.

-Made an adjusting entry to record the accrued interest on the Todd note.

1C

First, complete the table below to calculate the interest amounts.

	Total through maturity
	Midnight Co. Note - March 2, Year 2	A. Privet Note - March 17, Year 2	Mulan Note - August 7, Year 2	N. Carson Note - September 3, Year 2
Principal
Rate (%)
Time
Total interest

1D

Use those calculated values to prepare your journal entries for Year 2 transactions.

-Received Todds payment of principal and interest on the note dated December 16.

-Accepted a $6,100, 8%, 90-day note in granting a time extension on the past-due account receivable from Midnight Co.

-Accepted a $2,400, 30-day, 7% note in granting Ava Privet a time extension on her past-due account receivable.

-Privet dishonored her note.

-Midnight Co. dishonored its note.

-Accepted a $7,440, 90-day, 10% note in granting a time extension on the past-due account receivable of Mulan Co.

-Accepted a $2,100, 60-day, 10% note in granting Noah Carson a time extension on his past-due account receivable.

-Received payment of principal plus interest from Carson for the September 3 note.

-Received payment of principal plus interest from Mulan for the August 7 note.

-Wrote off the Privet account against the Allowance for Doubtful Accounts.

2

If Ohlm pledged its receivables as security for a loan from the bank, where on the financial statements does it disclose this pledge of receivables?

The Pledge of receivables is shown in the _____ (Income statement, Financial statement footnotes, balance sheet)