Question

Sage Hill Company had the following select transactions. Apr. 1, 2022 Accepted Goodwin Company’s 12-month, 6% note in settlement of a $39,000 account receivable. July 1, 2022 Loaned $18,000 cash to Thomas Slocombe on a 9-month, 12% note. Dec. 31, 2022 Accrued interest on all notes receivable. Apr. 1, 2023 Received principal plus interest on the Goodwin note. Apr. 1, 2023 Thomas Slocombe dishonored its note; Sage Hill expects it will eventually collect.

Answer 1

Answer:

Explanation:

Loan to Thomas Slocombe = $18000 on 9 month 12% note

Interest Receivable (Interest up to Dec 31 2022) = $18000 x 12% x 6/12 = $1080

Interest Revenue (Interest from 1 Jan to 31 march 2023) = $18000 * 12% * 3/12 = $540

Account receivable = $18000 + $1080 + $540 = $19620

Dr Accounts receivable $19620

 

Cr Notes receivable $18000

Cr Interest revenue $540

Cr Interest receivable $1080