Why is it 45/360,30/360,90/360 but not 45/365,30/365,90/365. Please explain, thank you. Calculation1. Interest to be received on note receivable of Lee= 9500 * 8% *45/360 = $952. Interest to be received on note receivable of Cheng = 2,000 * 9%30/360 = $15*3. Interest to be received on note receivable of Tomas = 5000 *10% * 90/360 = $125 Prepare journal entries for the following selected transactions of Danica Company for 2014.Exercise 9-10Notes receivable2014transactionsDec. 13 Accepted a $9,500, 45-day, 8% note dated December 13 in granting Miranda Lee a time exten- C2sion on her past-due account receivable.31 Prepared an adjusting entry to record the accrued interest on the Lee note.Check Dec. 31, Cr.Interest Revenue $38Refer to the information in Exercise 9-10 and prepare the journal entries for the following selected trans- Exercise 9-11Notes receivabletransactions P3actions of Danica Company for 2015.2015Jan. 27 Received Lee's payment for principal and interest on the note dated December 13.Mar. 3 Accepted a $5,000, 10%, 90-day note dated March 3 in granting a time extension on the past- $9,595Check Jan. 27, Dr. Cashdue account receivable of Tomas Company.17 Accepted a $2,000, 30-day, 9% note dated March 17 in granting H. Cheng a time extension onhis past-due account receivable.Apr. 16 Cheng dishonors his note when presented for payment.May 1 Wrote off the Cheng account against the Allowance for Doubtful Accounts.June 1 Received the Tomas payment for principal and interest on the note dated March 3.June 1, Dr. Cash$5,125

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Why is it 45/360,30/360,90/360 but not 45/365,30/365,90/365. Please explain, thank you.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Why is it 45/360,30/360,90/360 but not 45/365,30/365,90/365. Please explain, thank you.

Calculation
1. Interest to be received on note receivable of Lee= 9500 * 8% *
45/360 = $95
2. Interest to be received on note receivable of Cheng = 2,000 * 9%
30/360 = $15
*
3. Interest to be received on note receivable of Tomas = 5000 *
10% * 90/360 = $125

Prepare journal entries for the following selected transactions of Danica Company for 2014.
Exercise 9-10
Notes receivable
2014
transactions
Dec. 13 Accepted a $9,500, 45-day, 8% note dated December 13 in granting Miranda Lee a time exten- C2
sion on her past-due account receivable.
31 Prepared an adjusting entry to record the accrued interest on the Lee note.
Check Dec. 31, Cr.
Interest Revenue $38
Refer to the information in Exercise 9-10 and prepare the journal entries for the following selected trans- Exercise 9-11
Notes receivable
transactions P3
actions of Danica Company for 2015.
2015
Jan. 27 Received Lee's payment for principal and interest on the note dated December 13.
Mar. 3 Accepted a $5,000, 10%, 90-day note dated March 3 in granting a time extension on the past- $9,595
Check Jan. 27, Dr. Cash
due account receivable of Tomas Company.
17 Accepted a $2,000, 30-day, 9% note dated March 17 in granting H. Cheng a time extension on
his past-due account receivable.
Apr. 16 Cheng dishonors his note when presented for payment.
May 1 Wrote off the Cheng account against the Allowance for Doubtful Accounts.
June 1 Received the Tomas payment for principal and interest on the note dated March 3.
June 1, Dr. Cash
$5,125

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