following are transactions for vitalo company. november 1 accepted a $4,000, 180 - day, 6% note from kelly…

following are transactions for vitalo company. november 1 accepted a $4,000, 180 - day, 6% note from kelly white in granting a time extension on her past - due account receivable. december 31 adjusted the year - end accounts for the accrued interest earned on the white note. april 30 white honored her note when presented for payment. complete the table to calculate the interest amounts at december 31st and april 30th and use those calculated values to prepare your journal entries. note: do not round intermediate calculations. use 360 days a year. complete this question by entering your answers in the tabs below. interest amounts general journal use those calculated values to prepare your journal entries. view transaction list journal entry worksheet white honored her note when presented for payment. assume no reversing entries were made on january 1.

following are transactions for vitalo company. november 1 accepted a $4,000, 180 - day, 6% note from kelly white in granting a time extension on her past - due account receivable. december 31 adjusted the year - end accounts for the accrued interest earned on the white note. april 30 white honored her note when presented for payment. complete the table to calculate the interest amounts at december 31st and april 30th and use those calculated values to prepare your journal entries. note: do not round intermediate calculations. use 360 days a year. complete this question by entering your answers in the tabs below. interest amounts general journal use those calculated values to prepare your journal entries. view transaction list journal entry worksheet white honored her note when presented for payment. assume no reversing entries were made on january 1.

Answer

Explanation:

Step1: Calculate interest accrued on December 31

The note is for $4,000, with an annual interest rate of 6% and the time from November 1 - December 31 is 60 days. The simple - interest formula is $I = P\times r\times t$, where $P$ is the principal amount, $r$ is the annual interest rate, and $t$ is the time in years. So, $t=\frac{60}{360}$, $P = 4000$, $r=0.06$. Then $I_{Dec31}=4000\times0.06\times\frac{60}{360}=$40$.

Step2: Calculate interest accrued from January 1 - April 30

The remaining time on the note from January 1 - April 30 is $180 - 60=120$ days. Using the simple - interest formula again, with $P = 4000$, $r = 0.06$, and $t=\frac{120}{360}$. Then $I_{Apr30}=4000\times0.06\times\frac{120}{360}=$80$.

Step3: Journal entry on December 31

The journal entry to record the accrued interest on December 31 is:

Date Account Titles and Explanation Debit Credit
Dec 31 Interest Receivable 40
Interest Revenue 40

Step4: Journal entry on April 30

The journal entry on April 30 when the note is honored:

Date Account Titles and Explanation Debit Credit
Apr 30 Cash ($4000 + 40+80) 4120
Notes Receivable 4000
Interest Receivable 40
Interest Revenue 80

Answer:

Interest on December 31: $40 Interest on April 30: $80 Journal entry on Dec 31: Debit Interest Receivable $40, Credit Interest Revenue $40 Journal entry on Apr 30: Debit Cash $4120, Credit Notes Receivable $4000, Credit Interest Receivable $40, Credit Interest Revenue $80