Ouellette Co. adjusts its books monthly. On June 30, 2017, notes receivable include the following: Interest is

Question:

Ouellette Co. adjusts its books monthly. On June 30, 2017, notes receivable include the following:

Interest is payable on the first day of each month for notes with terms of one year or longer. Interest is payable at maturity for notes with terms of less than one year. In July, the following transactions were completed:
July 1 Received payment of the interest due from ALD Inc.
2 Received the interest due from Kabam Ltd.
31 Collected the full amount on the Best Foot Forward Shoe Co. note. 31Received notice that the DNR Co. note had been dishonoured. Assume that DNR Co. is expected to pay in the future.
Instructions
(a) Calculate the balance in the Interest Receivable and Notes Receivable accounts at June 30, 2017.
(b) Record the July transactions and the July 31 adjusting entry for accrued interest receivable.

(c) Enter the balances at July 1 in the receivables accounts. Post the entries to the receivables accounts.
(d) Show the balance sheet presentation of the receivables accounts at July 31, 2017.
(e) How would the journal entry on July 31 be different if DNR Co. were not expected to pay in the future?
Taking It Further
The interest rate for the DNR note is higher than for the other notes. Why might that be the case?

Balance Sheet
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