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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.

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

FINANCIAL ACCOUNTING
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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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
Transcribed Image Text: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
Transcribed Image Text: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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