Response to the following problem:
The following selected transactions are from Seeker Company.
2010
Nov. 1 Accepted a $4,800, 90-day, 8% note dated this day in granting Julie Stephens a time extension on her past-due account receivable.
Dec. 31 Made an adjusting entry to record the accrued interest on the Stephens note.
2011
Jan. 30 Received Stephens's payment for principal and interest on the note dated November 1.
Feb. 28 Accepted a $12,600, 6%, 30-day note dated this day in granting a time extension on the pastdue account receivable from Kramer Co.
Mar. 1 Accepted a $6,200, 60-day, 8% note dated this day in granting Shelly Myers a time extension on her past-due account receivable.
30 The Kramer Co. dishonored its note when presented for payment.
April 30 Received payment of principal plus interest from Myers for the March 1 note.
June 15 Accepted a $2,000, 60-day, 10% note dated this day in granting a time extension on the pastdue account receivable of Rhonda Rye.
21 Accepted a $9,500, 90-day, 12% note dated this day in granting J. Striker a time extension on his past-due account receivable.
Aug. 14 Received payment of principal plus interest from R. Rye for the note of June 15.
Sep. 19 Received payment of principal plus interest from J. Striker for the June 21 note.
Nov. 30 Wrote off Kramer's account against Allowance for Doubtful Accounts.
Required:
1. Prepare journal entries to record these transactions and events. (Round amounts to the nearest dollar.)
Analysis Component
2. What reporting is necessary when a business pledges receivables as security for a loan and the loan is still outstanding at the end of the period? Explain the reason for this requirement and the accounting principle being satisfied.