Question

Vauxall Holdings showed the following information regarding its notes receivable:

Note	Date of Note	Principal	Interest Rate	Term	Maturity Date	Days of Accrued Interest at Dec. 31, 2017	Accrued Interest at Dec. 31, 2017
1	Nov. 1/16	$320,000	4.0%	180 days
2	Jan. 5/17	132,000	5.0%	90 days
3	Nov. 20/17	122,000	4.5%	45 days
4	Dec. 10/17	160,000	5.5%	30 days

Required:
For each of Vauxall Holdings note receivable given below: (Use 365 days in a year. Do not round intermediate calculations. Round the "Amount of Accrued Interest at Dec. 31, 2017" answers to 2 decimal places.)
a. Determine the maturity date.
b. Calculate the days of accrued interest, if any, at December 31, 2017 (Vauxall Holdings' year-end).
c. Calculate the amount of accrued interest, if any, at December 31, 2017.



For Note 3:
d. Prepare the entry to record the accrued interest at December 31, 2017. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Use 365 days in a year. Do not round intermediate calculations. Round your answers to 2 decimal places.)



e. Prepare the entry to record the collection on the maturity date. Assume that both interest and principal are collected at maturity. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Use 365 days in a year. Do not round intermediate calculations. Round your answers to 2 decimal places.)

Answer 1

Note	Date of Note	Principal	Interest Rate	Term	Maturity Date	Days of Accrued Interest at Dec.31,2017	Accrued Interest at Dec.31,2017
1.	Nov 1/16	320000	4.0%	180days	30 April, 2017	0	0
2.	Jan 5/12	132000	5.0%	90 days	5 April, 2017	0	0
3.	Nov 20/17	122000	4.5%	45 days	4 Jan, 2018	41 days	(122000*4.5%*41/365)= 616.68
4.	Dec 10/17	160000	5.5%	30 days	9 Jan, 2018	21 days	(160000*5.5%*21/365)= 506.30

d) JOURNAL ENTRY

Date	Account and explanation	Debit	Credit
Dec. 31,2107	Interest expense	616.68
	Interest payable		616.68
	(To record accrued interest)

e)

Date	Account and explanation	Debit	Credit
Jan. 4,2018	Note payable	122000
	Interest payable	616.68
	Interest expense (122000*4.5%*4/365)	60.16
	Cash		122676.84
	(To record the collection)