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

The subject of this question is Business and the grade level is High School. Sage Hill Company records the acceptance of a note receivable from Goodwin Company and the loan of cash to Thomas Slocombe. They accrue interest on the notes and receive principal plus interest on the Goodwin note while Thomas Slocombe dishonors its note.

Step-by-step explanation:

The subject of this question is Business and the grade level is High School.

In the given transactions, Sage Hill Company has recorded the acceptance of a note receivable from Goodwin Company and the loan of cash to Thomas Slocombe. On April 1, 2022, Sage Hill Company accepted Goodwin Company’s 12-month, 6% note in settlement of a $39,000 account receivable. On July 1, 2022, they loaned $18,000 cash to Thomas Slocombe on a 9-month, 12% note. On December 31, 2022, they accrued interest on all notes receivable. Finally, on April 1, 2023, they received principal plus interest on the Goodwin note and Thomas Slocombe dishonored its note.

Answer 2

Step-by-step 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