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Braddock Inc. had the following long-term receivable account balances at December 31, 2016. Note receivable from...

Braddock Inc. had the following long-term receivable account balances at December 31, 2016.

Note receivable from sale of division $1,500,00

Note receivable from officer $400,000

Transactions during 2017 and other information relating to Braddocks long-term recievables were as follows.

1. The $400,00 note receivable is dated December 31, 2016, bears interest at 8%, and is due on December 31, 2019. The note is due from Sean May, president of Braddock Inc. and is collateralized by 10,000 shares of Braddock's common stock. Interest is payable annyally on December 31, and all interest payments were paid on their due dates through December 31, 2017. The quoted market price of Braddock's common stock was $45 per share on December 31, 2017.

a) Prepare all necessary journal entries related to this note for 2016 and 2017.

b) How much interest revenue would Braddock report related to this note in 2016?

c) How much interest revenue would Braddock report related to this note in 2017?

Business   Accounting   
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Answer #1
Year Account Debit Credit
2016 Note receivable            4,00,000
Cash 4,00,000
2017 Cash               32,000
Interest revenue      32,000
[Interest revenue for the year= 400000*8%]

b. Since note is received only on Dec.31 2016, no interest accrued for 2016

c. for 2017 interest= 400000*8= 32000

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