12 Dodge lncmakes a 200000 60day 9 cash loan to Vervoodt Co

12. Dodge lnc.makes a $200,000, 60-day, 9% cash loan to Vervoodt Co. The amount of interest that Dodge will collect on the loan is (use a 365 day yearl: A. $3,600. B. $300.00. C. $3,000.00 D. $600.00 E. $2,958.90 13. Vaspar Inc. bought $13,000 worth of merchandise from Dupont Corp, and signed a 60-day, 496 promissorynote forthe $13.000-Dupont\'s journal entryto record the sales transaction is: A. Debit Accounts Receivable $13,000; credit Sales $13,000 B. Debit Notes Receivable $13,086.67; debit Interest Receivable $86.67; credit Sales $13,000 C. Debit Accounts Receivable $13,086.67; credit Sales $13,086.67 D. Debit Notes Receivable $13,086.67; credit Sales $13,086.67 E. Debit Notes Receivable $13,000; Accounts Receivable $13,000

Solution

a. Amount of Interest Dodge Inc Collect = Loan Amount * Interest Rate * Days LOaned / Days in Year

Amount of Interest Dodge Inc Collect = $200000 * 9% * 60 / 365

Amount of Interest Dodge Inc Collect = $2958.90

b. Accounts Receivable $13000 Debit Sales $13000 Credit Option A

c. Option E

Debit AR $10123.39 Credit Interest Receivable $4.11 Credit Interest Revenue $119.18 Credit Notes Receivable

d. Debit Cash $9600 Credit AR $9600

e. Option A

Uncollectible Accounts Expense Debit $12000

Allowance for Uncollectible accounts Credit $12000