Tardif Corporation adjusts its books monthly On September 30

Tardif Corporation adjusts its books monthly. On September 30, 2015, notes receivable include the following:

Interest is due at maturity for the RES and Dragon notes. Interest is due on the first day of the month for the Ihara and MGH notes. At September 30, the balance in the Allowance for Doubtful Notes account is nil. In October, the following selected transactions were completed.

Issue Date		Maker		Principal		Interest		Term
Mar. 31, 2015		RES Inc.		$15,000		5%		7 months
May 31, 2015		Ihara Ltd.		20,400		7%		18 months
Aug. 31, 2015		Dragon Limited		5,500		6%		2 months
Sept. 30, 2015		MGH Corp.		19,600		5%		16 months

Date Account Titles and Explanation Debit Credit Oct. 1 Oct. 31 (To record dishonoured note; eventual collection expected) Oct. 31 (To record collection of note and interest) Oct. 31 To record accrual of interest) Oct. 31

Solution

Date Account Tiltles and Explanation Debit Credit Oct 1 Cash $119.00              Interest Receivables $119.00 ($20,400 x 7% x 1/12 + $19,600 x 5% x 0/12) Oct 31 Accounts Receivable $5,555.00 Notes Receivables (Dragon ) $5,500.00 Interest Receivable ($5500 x 6% x 1/12) $27.50 Interest Revenue ($5500 x 6% x 1/12) $27.50 Oct 31 Cash $15,437.50 Notes Receivables $15,000.00 Interest Receivable ($15000 x 5% x 6/12) $375.00 Interest Revenue ($15000 x 5% x 1/12) $62.50 Oct 31 Interest Receivable ($119 + $62.50) $200.67 Interest Revenue $200.67 (Ihara = $20400 x 7% x 1/12) + ($19600 x 5% x 1/12) Oct 31 Bad debt Expenses $20,400.00 Allowance for Doubtful Notes $20,400.00