Income producing forms. How does this work? This came across my desk and I thought it was very interesting. I said, you know what? I need to check this out. Bring this out to the audience because we hear about so many things, real estate, single family homes, multi-family homes, apartments, things like that, but income producing forms. But without further ado, as you guys and girls can already see in this description box in the topic, we have a very special guest coming from Rad diversify, Mr. Dutch Mendenhall. He's in his Tampa Bay, Florida office today right now. I'm in Denver, Colorado.  Once again, ladies and gentlemen, boys and girls, my name is Prince Dax. This is Dutch Mendenhall. How are you doing today, sir? I'm doing good, Prince. Thanks for having me. Thank you. Thank you for being home for people who may not be there.  How did you get into this whole real estate thing? Oh, yeah, man. So I was a consultant for about a decade in real estate and information marketing and real estate companies that did coaching and mentoring and over the years, I kept writing these models and seeing these business models. And I said, hey, nobody's ever combining the maximum ability for people to learn, be trained, be developed in real estate and the investing at the same time. And so after a lot of our students when we opened our own brand said to me, said, hey, Dutch, invest with us, put your money where your mouth is. Stop teaching, stop training us. I said, all right, I said, let's do it. Me and my partners, we began doing it in 2015 with our investors. We've built a $200 million plus portfolio hand in hand with our students over the years and was started off with residential family homes and tax deeds and leans then grew into multi family. And then when the pandemic hit, we moved into income producing farms. And so I'd had a good friend for a long time. It kept pushing me to invest into farmland. And I always said no. And I kind of ignored it. And he, you know, was a multi-generational farmer. And then the pandemic hit and I said, hey, farms having a farm that produces crops and produces food and has cattle on it. Sounded pretty interesting to me. And then I started to run the math and I started to analyze the numbers. And I said, if I can treat each acre like an apartment unit, if I can treat each acre as its own income producing tract of land. I said, when I started looking at the cap rates and I started looking at the return side, I was just blown away. And then our ability to do scale. I mean, one of the things we actually recently did was we bought a cattle auction and so, you know, to go along with our cattle that we're having and stuff. And so scaling, doing our economies of scale, growing, growing the different income parts of our farms has been it's been the most profitable thing I've ever done in real estate, which is interesting because I've been in real estate, you know, in one way, shape, or form my whole adult life. And I never planned on getting into farms. And then and then as we got into farms and we realized the profitability and we started to build our teams and our and our agriculture teams around them, we started realizing we could redivide allies land. We could increase irrigation. You know, it used to take many, many people and we used to take a whole bunch of effort and use way too much water. We can now control our irrigation on our farms, on an app, use less manpower and use a whole lot less water in order to do the best irrigation proper properly and also take land that was not not farmed at all and reclaim it. Right. I think soil is one of our great American resources here in our country. And so for us, we decided, hey, we go all in on this and we opened up, you know, rat American. It's been the most popular investment vehicle and most popular returns we've ever had for our investors. Nice. Um, now this income producing from farms, how does this play a role in the modern agriculture? So let's get down to the nuts and bolts of it and say, hey, um, you said you manage about a real estate portfolio about 200 million. Correct. Right.  How does that work? Do you partner with the farm and do you do it yourself? Yeah. And so it just depends on the individual farms. So there's a lot of different things that happen in farming. So one of them is people will lease farms. And so, um, for us, we don't like leasing out our farms. And the reason we don't like it is because the maximum income potential for them is not usually reached or utilized. And so we found managing operating them ourselves is the way best way to maximize income. Now, if an investor comes to me and he says, Hey, Dutch, I want to invest into the farms, how are we a tool or a continent? I think there's one of two ways. One, we have our two investment vehicles that people could invest into. One is rad diversified, which is our public re non trader re, which has been around since 2019 started at $10 a share. And the current share price is 2504. Um, and then we have rad America, which is exclusively our land and farm land, read, um, which somebody could invest into. And that's currently opened in this year, January of this year. And it's still $10 a share, but we've raised $6 million in capital. We've bought just under $20 million in total real estate, uh, since opening, since opening that fund. And so, you know, we're super excited about the future of it. And then the other way is, you know, sometimes we have institutions or we have family offices or high net worth investors who come in and say, Hey, Dutch, I don't want to invest in a fund. That's my, not my vehicle. I'd like to join venture with you guys. I'd like to be a 50% owner or a 20% owner in a, in a farm. And so we've been able to do some different, um, joint ventures with, with farms as well. And so that's worked out pretty real effectively for us too. Okay. So let me get this straight. So you guys have a publicly traded REIT, real estate investment trust. I got that correct. Public non traded. Oh, non traded. Okay.  So the easy way, the lazy way would be to just lease it, just have someone else manage it and operate it.  Right. And so a babysitter is someone who has money, they're going to throw money into a piece of real estate and just use a property manager. And they're just going to utilize the income on it, which is great. I said, Rad, we're a true operator, right? We get our hands in the soil. We get our hands dirty and we run and operate it ourselves. Our, we used to ride a home farm the year before we purchased it, had a lease on it for $40,000 a year in income. 18 months later, we produced seven figures, a million dollars in total revenue on the property in, in the second full, full year of business. And so how we operate is very, so make sure I got there right. So the $40,000 you're saying, Hey, somebody would just leasing out their form just for, Hey, this is my farmland. Leased it out for $40,000. So you're saying Rad came in and said, Hey, I guess you started producing crops, is there livestock? What, what did you do there to generate that seven figures? Yeah. So we looked at the Ukraine-Russia crisis and Ukraine was the largest producer of wheat in the world. Right. And so I said, Hey, I said to our farm team, I said, can we produce wheat? We've produced corn. We've done soybeans. We've done other things. I said, is wheat something we can plant? And they said, yeah. And actually on all of our upper acres that used to be winter wheat and one of the things they had done is, so there's, there's government. I want to say the term is QRP. I could be wrong, but basically, if we let a part of our farm not be farmed, the government for agricultural, for conservation reasons will give us a monthly payment, a monthly allowance per acre. What that had done on that farm is it had expired. And so they were no longer receiving the monthly income, but they never began farming, right? A whole lot of the farm. Make sure I got you that. I'm trying to mean to cut you out there, but. That's okay. We have a little lag. I just want to make sure I'm tracking you all the way. So you said that the government incentivized you to produce that, to produce the, the agricultural, the produce that you was making from the land. I got that correct. That was, that, that is great. That's a pretty common thing in farming. Nice. Nice. Okay. They, you, I'm learning something new here. So you get, you, so you get it, is it a tax break or is it a monthly sniping?  It's a specific dollar per acre. So they give you a certain amount of money per acre. And so it's not, it's not, it's not a tax break. It's a specific dollar amount per acre. And I, my team can look up the, the specific definite term and they'll tell me in just a minute. But, you know, it's interesting because it's common in farming where like farmers are notorious for saying, I'm broken. I'm poor, right?  But the kids have grown up generationally thinking, hey, my family's not poor, right? My family's been tight. And so lots of times family are thinking about how they want to pass the farm down generationally. But then their children aren't in a place where they want to, they want the farm, right? They haven't grown up in a place. And yeah, you do have generational farmers where that is awesome. But a lot of the farms we've bought are, are, are parents or families where they just wanted the farm to continue to, to exist and flourish. And they wanted to pass it down generationally, but whatever their family situation is, it didn't happen. And so, you know, we're able to go into these farms and really make them what they were always supposed to be. And lots of times what's different about us, I guess, I, than a traditional farmers, a traditional farmer is leaving season to season crop by crop. But at Rad, we can sit here and say, hey, what's the long term best practice for this farm? You know, for me to put, put money into the equipment, for put money into the irrigation, put money into the soil, it's just good, long term business investing. And everything for us is never about the dip or about the bad season. Everything for us is about what is the proper income? What is the proper play for this property? Long term and what's going to be the best thing for our land and soil. And so I found over the years that this is how we've been maximizing returns and getting just a higher yield, but inflation has helped to in this sense, right? Hyperinflation, commodities, the price going up, right at one point in time. And I, and I couldn't tell you the price, price of hay in this moment. I'd have to look it up, but at one point time, hay went from 160, you know, dollars a ton to 300 and over doubled, right? Two X and the price per ton. And so that makes a huge difference when you're when you're farming and, and, and like you can literally double what you were selling a crop for, you know, just 12 months before. And so for us, I took a look at those, those commodities and so which commodities do I know we're going to grow in value, but then also makes sense for us to plant and farm on, on our crops. OK, so now you go where you find and I've known people like that personally, where their grandfather was a farmer, grandfather, you know, farm the land and when it gets down to the grandchildren, the grandchildren go off to college or the kids go off to college and they nobody's interested in the land. So the land is kind of sitting there.  How does that work? Yeah, it's a great question. So on some farms, there's existing team in place. There are people who are currently farming. And essentially what we do is we come in and we make their lives easier, right? We give them a little bit better technology. We give them a little bit more resources and lots of times they have all the ideas already in their head on how to improve and make the farm more profitable. But the most common thing is, is we take a team into our Weezer Idaho farm and we do training. And so they'll come and live on premises and they'll develop and they'll train and they'll do best practices. And so that makes a big difference.  And so there's an intense first season, right? And I go seasons as like winter, spring, summer, fall, right? So whatever the season we buy the property in, there's usually a pretty intense first season where we're doing some really hard work. And then it's always the second summer where you're maximizing profitability. Kind of that first season of farming that you go through, whatever the farm was before is pretty much what it's going to have to be during the first season. But then that second season is when we've seen the returns really yield profits and make a big difference in the ROI. Okay, so you go in, you grab some farmers and you say, hey, if you don't have a team involved, we're going to make your life easier.  Now what about that back end of the farm of like once the produce is produced, how do you find out who to sell it to? Or who's your target audience is that already built in? What do you do on that end? Yeah, there's markets, right? Just like you would have a marketplace like a normal person if they wanted to go buy lettuce, right? They can go buy lettuce at a Whole Foods or a Sprouts or whatever other brand is out there. For us, there's markets and there's buyers. And so there's professional buyers that we have relationships with. And if you do enough research and enough homework, what you do is you get the professional buyers that are used to buying specific commodities in your area and you build a relationship with them. And as you build a relationship with them, you can kind of start to begin to be in a place where you understand what is your price per ton that you're going to get or price per yield that you're going to get for the commodity that you're selling. But at the same time, right? Rad Roy is about economy of scale. It's what I've always believed is a huge part of our business. And so for us, even being integrated with the cattle auction butcher shop with our cattle makes a big difference. And so for us, like cattle, typically you could go buy a cattle for $1,200, right? For a fully grown male cattle, pretty normal, right? That we would sell. I'm not using, by the way, I'm using layman's terms, right? For the farmers who are gonna judge me for not saying heifer or steer one of the other things that are out there, right? So, but then we take it to the butcher shop and if we butcher the cow ourselves, we can get as much as $1,800, right? Per cow. And so you take the 1,200 plus the 1,800, you're actually at 3,000. And so we decided to go ahead and start building our own butcher shop. And then we realized there was a cattle auction for sales. So we went ahead and purchased cattle auction. So scaling's a big important part of it and you can integrate. And we're very small, right? We're not Kroger who's a multi, the billion dollar companies that are out there, right? And different things. We're just, you know, we're an investment company that believes in our country, believes in our soil and believes in Americans investing in Americans. And if we can provide a great product for people, what's better? So now, so I'm a truck driver, a school teacher. I'm driving down the road. I'm listening to this podcast. I'm watching you live. I'm like, wow, incomproducing for farms. I never heard of it. I never thought about that. I knew what a farm was. That makes perfect sense. How do I get started? What do you say to that person? Well, I say my book Money Shackles, right? And I know I'm not trying to overdo promotions here. If anybody wants to go get a copy of our book, go get it. The reggae industry began in 2012. It's Money Shackles, right? Money Shackles is your book? Yeah, Money Shackles. Money Shackles. If we could put that up in Hawaii, the cover of his book, Money Shackles, that'd be great for the fans and the audience to see and the listeners to, you know, be able to catch why you're speaking to. So go ahead, that should mean to touch you out there. Oh, you're great, man. I just got so passionate about the financial system in America is there's a part of it that's broken, right? And it's people's understanding of how money works. And so the Shackles is all about people breaking free from financial bondage, right? I believe the difference, you know, between the understanding of what money is and not understanding of what money is, is huge.  And reality is that debt can work as a useful tool for you, right? Investing can work as a useful tool. So in the book, we talk about the reggae industry in 2012 and Americans have the ability to be a fractionalized owner, right? In different investment vehicles, they can be a fractionalized owner in a farm or a luxury property on the beach. They can be a fractionalized owner in a business, right? It's the first time that a non-accredited investor, right? And I hate the difference between non-accredited and credit. I think it's economic discrimination, personally. So, but the first time I know about it, 110%, once I learned what an accredited investor was, I was like, well, this is creative because if you don't make this type of money, you may not understand what the economics are. I'm like, no, let, you know, lays a fair, keep your hands off of it. People will figure out, if you make a sophisticated investment and you didn't understand what you were doing, what's the difference between me going to a casino?  Nobody's going to come back and give my money back. So why not let me make an opportunity that could change my life? So I'm right there with you on that 110%. Never understood it and never got it, but, you know, go ahead, I'm sorry about that. No, you're right, man, because it's clear there's a difference in opportunity, right? The wealthy have had the access to finances that the non-wealthy have not had access to, right? And for someone else to determine, you know, what an America can do is unconstitutional, right? We all have the equal right to pursue happiness, right? That is one of the core values in our country. It's one of the core beliefs. And to take an accredited versus non-accredited is an, like to me, you can be as hard as you want on the companies that are allowed to take investment capital. And they should have to all play on the same footing. But to take an average American and say, you don't have the same equal play in footing as others is frustrating. So for me, Money Shackles was all about showing Americans that from 2012 and on, there's a new path, a new way that passed. There's an industry that did not exist as now is in the billions, right? And I think it'll be the greatest. For me, I think it'll be the greatest alternative to Wall Street that's ever existed. I think for an average American, there's never been a true alternative to Wall Street. And I think the reggae industry creates that from crowdfunding. It creates it from the ability to invest in real estate in a way that they never had before with fractionalized ownership. So I think it's incredibly powerful. Oh, you said reggae, reggae, gotcha. Reggae, yeah. Yeah, I was thinking, I'm saying reggae. I'm like, reggae is blowing up. I gotta listen to this. Okay, so got it. So you're saying the reggae is allowing everyday people to get into these crowdfunding access. So a person is saying, hey, I'm listening to you, Dutch. I like what you're saying. I like rad. The website was put up there. We went through the site, we like what you're doing. How do I get started with this? How do I get into this? I want to diversify. I already have a bunch of stocks. I own my own home. I have some equity in my home. I would love to get into a forum. What would be your entry point? I mean, if it's directly with rad itself, right? You absolutely can go to one of our websites. You fill out a form. One of our team will talk to you, have a conversation. Because of how the industry works, they're not allowed to sell. They can just provide information as all they can do. Do your due diligence, take your time, know who we are, right? You know, we have third-party audits, third-party evaluators of every asset we have. We're completely transparent with every asset. You literally will see addresses. You can drive by the street and you would know that rad owns it. You can pull title, know that rad owns it. I think one of the reasons I went through the regulation A, regulation in the beginning principles, because I wanted investors to feel comfortable and feel that like, hey, we're doing everything we can do to be compliant. We're doing everything we can do to make sure that they know what's going on. Like you look at the old, like you look at Madoff and you look at some of the other stuff, right? He wasn't a public company. He was private. He didn't have the reporting. There was not a set of assets that he owned that you can verify and you can check, right? And reality is, we shouldn't allow those things to exist. I believe, right? I don't think our government should allow those things to exist. I think if you're taking in people's capital and money, you absolutely should have to be transparent, open, and real about everything that you're doing. For me, even traders, they should have to have open screens and open books. But that's my own agenda of what I believe in Americans should all have access. Growing up poor, I knew I didn't have the same opportunities with others. And there are certain things I couldn't even understand growing up. I didn't understand why one person could get a scholarship and another person couldn't. I didn't understand why, if you looked at the wealthier schools, well, they had a hundred scholarships that went to their seniors and in my school there was like two, right? That went to seniors and so some of those things, I think it's just in my DNA to create more of that equality. It's important to me as a person and I strive to do that through Rad. One of the things we did is we started a Rad Foundation Scholarship. So actually everybody who invests with us, their kids become eligible for our scholarship programs and it's something we just did for all of our employees and investors. We gave out 14 last year. This year I want to give out a whole bunch more than that.  Okay. So do you have a minimum investment? Do you have to have a minimum? If you have to be a quarter million, 5,500, what do you got to have to even think about getting into the space? Yeah. So through our Regulation A, we were a $1,000 minimum investment. Through our Regulation D, we're a $10,000 minimum investment. We are currently, if we've applied for a Regulation A with our Rad America, we had the Regulation A with Rad diversified and then there's what's called a Regulation D and so the minimum for that is our $10,000. And so just jump on the phone with our team. They'll help you figure out where you can invest with us, where you can not invest with us and those kind of things. There's a lot of regulations and compliance and so we'll provide you all those disclosures and things are on the website. You got to read the offering circulars. I'm always very careful on this line just because I don't, I'm not Elon Musk so I can't tell the SEC. I'm going to say whatever I want to say. All right. I want to respect and listen to them and that part of it. And so it's very, very important. And though we are a good-sized company and we've been around a long time, we're not the richest man in the world. So. Okay. And I got to answer this question where someone is looking at it. They're saying, hey, so what are those returns? What are those annualized returns on this incomproducing farm? You know, what's the average? I know you can't predict the future or say, hey, this is what you're going to make. You know, guarantees there. But you know, what has been some, you know, compared to the S&P 500. How has it done? Yeah. I mean, I've kicked the S&P 500s. I read your thing. I'll be careful. I kicked their butts, right? And the reason, you know, I, we started at $10 a share, 2019 in Rad Diverse 5. We're currently at 2504 a share. And so, you know, our share price has grown over those years. Our investors, you know, are every six months they can do what's called a cash redemption and they can redeem stock with us and we purchased that back ourselves versus trading on the open market. Because I didn't want what Elon or what Biden or Trump or what someone else says to change my stock price. I wanted our stock price to be based on net asset value, be based on investment income, be based on exactly what we're doing every single day. And so, Rad America has not had its first stock price change yet. It's at $10 a share currently and it'll have its stock prices, you know, changing accordingly based on our net asset value. What I, here's what I say, I can never predict the future and I actually think any real estate vehicle that says here's what your IRR is, here's what your return on investment is, here's what your future value is.   They can't predict what the cost of labor is going to be in the future, especially not in a hyper inflationary world. They can't predict those things.  Here's what I would say, the reason people say, well, how did RAD get such good returns? I said, I can't understand why other REITs aren't getting better returns. When you take a look at it and an asset and you say, here's what the leverage we use on, here's how much money we put in, here's how much income it produced, here's how much equity it produced. The math makes good sense to me. I think what you see them not do is you don't see them by under market, off market, non-market properties. I don't think you see them by value add increased, you know, value, value assets and properties. And I think they're now also not doing, you know, there's a science to real estate, right? Location, location, location is true. But what does that actually mean, right? You understand what the landmarks are and how the price variation comes off of a landmark based on the valley. I call it the valley in the desert. One side of every landmark is going to have higher values. The other side is going to have lower values, right? The other side of the railroad tracks is a very true statement and it's very true, right? Based on the school systems, based on the crime rates and based on how things are lined up, it's going to determine, right, the future values of properties and how much they appreciate. And in different economies and markets, certain locations, certain types of value assets are going to appreciate more than other economies. Like right now, assets that were luxury, actually 12 months ago, luxury assets were going to appreciate incredibly fast. During hyperinflation, they were going to grow in value incredibly fast. Right now, income-producing properties are going to grow faster in value. Why? Because rents are going up. Anytime interest rates go up, mortgage rates go up, which causes rents to go up. As long as the mortgage, the value of an average mortgage continues to go up, landlords will continue to inch the rents up right underneath that. If people don't think like, I believe in deep state, I believe that the markets move when they make it move, right? And if you don't know how to take advantage of that and you don't know how to read it and see it, then you're not paying attention. So, you know, they want- I'm talking to you again. Their properties can work more money. I want you to say this again, Dutch. That was a very good point you made there. You've been a real estate guy. How can you take advantage of rising rates?  And so for me, as a landlord, you're going to raise your rents accordingly with that, right? And I'm not doing this from a greed standpoint. It's the fact that this is what the market determines. This is what the market control is, right? And so as rents go up, you produce more income. As you produce more income, your property becomes more valuable. And so income-producing properties are going to be more valuable during high interest rates than brand new homes. And so it's just difference in how the game is played. As the cost of a mortgage continues to go up, fewer and fewer home buyers and fewer or fewer people want to move, people are going to be more forced to move, like if they have to move because of jobs or they have to move because of relocation, then because they want to move. When it's lower in interest rates, people move because they want to. They move because they can get another property in a location that they desire. They move because they can get a lower interest rate maybe than they previously had. Right now, people are moving because they either haven't owned before and so now it's time for them to own. They've gotten to that financial place that time in life or people move because they have to, because of life circumstances. Okay, now I want to say this for everybody that's out that if your kitchen is live or a playback, the first two people that I see comment the words, Dutch, you want to get a free copy of his book, Money Shackles.  Courtesy of Myself Protestants.  What do you got to say to everybody? How can people follow you? How can people get more of you? Things like that, what do you want to leave the audience with? I mean, we're on every platform, right? Twitter, LinkedIn, Facebook, TikTok, right? Instagram, all of those things. If you want to follow, be a part of our tribe, right? We're going to be there to serve you. We're going to be there to take care of you. We're a very pro-American company, we believe and our warriors, I say, if you don't like our warriors that have made us free in this country, then don't invest with us, don't buy our book. I think I've had a great freedom to build an empire and wealth and the more paths and more avenues that I can open that up to everyday people, to the professionals, to the people working their ass off here in this country to be successful, I'm going to continue to do that and that's my mission in life. So Prince, man, great gratitude. You're spreading the message and I appreciate that. Thank you. And also I just retired from the Navy 20 years. So yeah, I'm one of those warriors you was talking about there too. So definitely. Well, people got your information, follow more, ask them questions. This has been a wealth of knowledge of talking about income producing, what to do, everybody look at rising interest rates at the end of the world and oh my God, the world's coming to an end. It's like, hey, there are ways to take advantage of how I'm rising interest rates too. So with that being said, Dutch, anything else before we roll out? If the world's coming to an end, you definitely want to have your money in the right places, right? And that's the thing is like the people that are controlling the greater things that are beyond your reach and my reach, Prince, right? They don't want the world to end, right? But they do want control of it and I believe in every American's freedom to control their own money, to control their own financial future and destiny and I look forward to being a part of that journey with those of you who see this and appreciate you, Prince, very much. Appreciate your service, brother. I can't have more gratitude. I've been free my whole life and I'm pretty lucky to have that freedom. Definitely, thank you. Well, ladies and gentlemen, that's going to conclude today's show, today's episode that you have, you have Dutch Mendenhall from Rat Diversified talking about income producing farms and also real estate and himself. Don't forget to drop Dutch below in the comments to get your free copy of his book, Money Shackles. Hope you guys and girls got something out of it. Until the next video, podcast, cartoon or whatever it is, whatever it, whatever, whatever. Crazy, you see me doing around in this globe. Peace, be safe, I'm out and thank you.


House Slytherin Pure Bloods You Night In this short we'll showcase you the Slytherin Common Room Easter Egg.  Eventually you'll see that within that lake there's a giant squid and this squid will hit the window in annoyance with one of its tentacles. Pretty cool Easter egg for sure guys. If you want to see more check out my channel for more Hogwarts Legacy.


In this presentation, we will work a problem on notes receivable and accounts receivable focusing primarily on notes receivable. We will be transferring from accounts receivable to notes receivable giving us a good example of the difference between the two. The information that we will be using is on the left side. We're going to put that information into the worksheets on the right side. This will be used in order to calculate the interest. Then we're going to go over here. We're going to post that information as needed to the general journal out what we'll record that I should say to the general journal. And then post it to a little worksheet here rather than the full general ledger. This worksheet being the beginning trial balance, our adjustments and the ending trial balance. The beginning trial balance being in balance by seeing that the debits are positive numbers, our negative numbers, debits minus the credits if we sum them up is zero, meaning debits minus the credits add up to zero or debits equal the credits. So this zero means we're in balance. Net income is going to be this 20,000 only. So there's the net income of the 20,000. We're eliminating many accounts just focusing in on what we need. We're going to be looking at the accounts receivable here and we'll be looking at these notes receivable, which we are going to break out into a separate note receivable for each receivable that we will be having each client that will have a note receivable. This is a common way to do it. When we put it to the financial statements note, it will all be probably combined together into one category called notes receivable and some companies might just have one category on the trial balance as well and then break it out in a similar way as we do to the subsidiary ledger for accounts receivable, which we'll take a look at in a second to the right, that will just basically be a worksheet breaking out that information and some companies I actually prefer to, if there's not too many of them, to break out the notes receivable into separate accounts so that we can track them on the trial balance and then combine them together on the financial statements into one account or one grouping of accounts called notes receivable. Okay, so here's the accounts receivable here, meaning we are owed $37,500 from customers. If we want the detail of that, we're not going to look at the general ledger in this problem, but that would only give the detail by date. We are going to look at the subsidiary ledger breaking that number out by customer. These are unusual names, but these are the customers, just the simple names here, and these are the people that owe us money, $6,200, $2,120, and if we add all those up, including the other, then it adds up to this $37,500 that matching then that backing up and supporting the accounts receivable account. So now let's go back over and let's see what we have. We're going to start off with the prior year. So we're going to really be working in, starting in February, we're going to jump forward in time. That's just the nature of these types of problems. These are a little bit more difficult in that, for that reason, because in the Accounting Department, they're not things we do from a day to day process. And therefore, when we look at a problem, we're going to jump through the whole year so we can do these calculations of interest. So that's what we'll do. So be aware that when we do this in practice, we're not going to be doing these types of accounts every day. They will be things that we'll have to do when they become due. And we'll start off here with the prior time period, December of the last year, and we'll do some calculations because we want to see what happens in terms of the adjusting entry and just give an example of that. And then we'll move forward into the current year and calculate interest and then pay off the notes receivable. So the first thing is going to be the prior year. We're not going to actually put the journal entry related to this in place. What we're going to do is show how the adjusting entry would be in place and what is the result on the trial balance from it. And then move forward from there. So on 12, 17, we have 60 days, 7% note receivable, giving D company a time extension on pays due accounts receivable. And path is probably to be passed due accounts receivable. So we're going to give them an extension on 12, 7. So what happened is they had accounts receivable. They didn't pay us for whatever reason. We gave them an extension of time, but now they have to pay us interest for that extension of time. So we're going to calculate the interest then using this little worksheet here. So this will calculate the interest. We're going to say that we had 1000 or 14,100 principal, 7% interest. Because it's formatted here already, I can just type 7 is a 7%. If we were to use a trustee calculator, I would typically say 14, 100 times 0.07. 7% 0.07 will make a percentage 7%, 987. That percentage, by the way, is in the home tab in the numbers group and percentage. So if the cell does something funny, always check the type of formatting of that cell. We will then multiply this out. I'm going to take this number times that number, do that with a formula in Excel by saying equals pointing to that 14,100, multiplying times that 7%, or C7 times C8, and enter. That gives us the 987. Then I'm going to divide that by the number of days in a year. We're going to make this nice and even. Notice that we could say there's two months, 60 days to about two months. We're going to say how many days are in a year. And the reason we're doing this is because the 7% means 7% a year. We only have a 60-day time period. So we don't usually talk in terms of months. We don't usually say, what's the 60-day interest rate? Because the rate would be really small that way. So the convention that we use whenever we say interest typically means interest for a year, which we then have to calculate out the interest for a whatever time period we're using, and in this case, 60 days. So if this is going to be the interest we would have to pay if it were for an entire year, how can we break it out to 60 days? I'm going to break it out into a daily interest rate and then multiply times 60 days. The way to do that is to say this equals how many days in a year? You would say 365. I'm going to make it even, which is 12 months times 30. So we're going to assume, in other words, all months have 30 days rather than 28 or 30 or 31 and enter. So then we got the 360. Now we're going to take the interest divided by the number of days. So this equals this 987 interest per year divided by 360 days gives us two and 74 cents per day. Then we're just going to multiply that times that 60 days. So 60. And we'll take that 274 times the 60 by same equals pointing to that 274 in C11 multiplying times that 60 in C12, giving us the 164.50. Now I'm just going to round that by putting that same number into this cell with a formula equals this 164. It just took off the 50 cents Y and added it 165 instead of 164.50. How? By going to the home tab numbers. And I just took off the decimal. So note that Excel still sees it as 164.50 but shows the 165 in this cell. So be careful with rounding. So that's going to be this calculation. Now note we could have got to the same number of a couple different ways. And you may see these other different ways. You might think that this calculation is a little long, but it works. And I think it's the easiest way to kind of see this. You could do it with months, however, as well. This problem probably works best with days. But just note you'll see it in different ways. So I mean we could say if there's 987 interest per year and there's 60 days, that's two months. So instead of breaking it by day, let's break it out by the number of interest per month or divided by 12 months in a year, 82.25 for 12 months. And each month, I'm sorry, each month times two for 60 days, two months, 30, 30, 60. So that would give us the 164.50. So another way we can calculate it, we can also take the ratio. So we could take the 60 days divided by 360 or the 0.1666, which is the same as saying if we said there's two months divided by 12 months, the point once that same 0.166 times the interest for the entire year, the 974 times 987, that's going to be that 164. So we're really just using a ratio to me to do that ratio calculation, isn't as intuitively easy to think about as breaking out the interest per day or per month and then multiplying times the number of months or days we are using. Now, that would be the interest for the entire year. What we want to have now is the interest as of the cutoff date because we're going to say that we're doing the financial statements as of 12.31 and we've earned interest that we have not yet received and therefore we need to record that fact as of the end of the time period. So even though we're not going to get paid for 60 days, we only have a few days, half a month or so, to get to that 31 days. So let's do the same calculation one more time, but now just calculate till the end of the year. So it's going to start off the same, 1714.100 times 7%, just going to do this again. This would be interest for a year, remember. This cell, which is d7 times the 7%, gives us the interest, but that's interest for the entire year. We're only looking for like half a month and then we're going to divide that by the number of days in a year which equals 12 times 30, 12 months times 30 days or 360. There's really 365, we're rounding to 360. If we divide that out, we're going to say equals to 987 divided by the 360, gives us the interest per day to 74, same calculation we just did. However, instead of 60 days, we only have a few days till the 31st. Now we're going to be a little bit more exact here and try to get the exact number of days. We could count it out on her fingers, right, 17, 17, 18, 19, 20, 20, or do a subtraction problem which would look something like equals 31 minus 17. And that would not include the day 17 and I'm going to include it, so we're going to say plus one. And if you're looking at a problem that breaks it down to a day or so, that's probably going to be where the difference may be at if you're off by a little bit. Then it may be that you're not including or are including that day. You want to be careful with that. That could be where the difference is. Okay, then we're going to multiply this out. This equals to 274 times this 15 days. And then I'm going to round it just again just by putting that same cell down here which is already formatted for us in order to take off the 13 cents or equals that 41.13. So $41 about is the interest. What that means is that we're going to earn $41 as of the end of the year, the end of December 31st of the 165 that we're going to get paid at the end of 60 days. So we earned $41 as of the end of the year. We haven't yet got paid for it. We have recorded the journal entry for it. Let's take a look at it. So if we go to the trial balance, we can see that we have this $41 in interest receivable. Why? Because at the end of last year, what happened is we said that people owe us money that we haven't received yet for the receivable for what we've earned on it for those a couple days. We earned it already by loaning the money out. So we debited the interest receivable and we credit interest revenue. Why isn't there anything in interest revenue? Because the interest revenue has been closed out to retained earnings as of the end of last year. And so this year, it's not there because it closed out and we're starting with a zero balance. So now we're going to go into the current year. We're going to jump to the current year and we're going to record some of these transactions. Now we're in the current year. We're going to record this stuff out. So on 214, receive payment from the company of both principal and interest. Make sure to take into account the interest receivable on the trial balance. Okay, so now we're going to say that they paid us. So here's that they paid us to 14100 plus the full 165. So let's see what the journal entry would look like then. We're going to go back over here. We can ask our questions we would typically ask and that would include is cash affected? I'm going to put the date here, which is 214. We're going to say, yeah, we got cash. Cash is going up. Cash has a debit balance. We're going to make it go up by doing the same thing to it in this case. Another debit. So I'm going to copy cash, right-click and copy. Put that up in J5, right-click and paste 123. Now the amount's going to be, if I scroll back over, the 14100 plus the 165, the full amount of interest for the entire time period. We already earned this over here. We haven't received it, however. So the 141 plus the interest 165.  You don't want to forget the number, 14100 plus the 165. And there's the 14265, 14265. That's how much we're going to get. Now we've got to take it off the books, meaning this note receivable. That's what's received. It's only 141 because it doesn't show the interest yet. Part of the interest is shown here, but not all of it. But in any case, this needs to go off the books. It's a debit balance. We need to make it go down by doing the opposite thing to it, which in this case is a credit. So I'm going to copy that. We're going to paste that in J6, right-click and paste 123. It's already indented here for us. I'm going to leave that. We're going to go over here. I'm going to put the credit to represent the credit with a negative 14100. Then we have this interest receivable. We just saw that on the books. We need to take that off. That represents the receivable for what was earned last time period of the 165 interest. So we need to take that off the books because it's now been received. And it's 41. It's a debit balance. We need to do the opposite thing to it to make it go down, which is a credit. So we're going to copy this in S13, right-click and copy. Put that in J7, right-click and paste 123. The amount is going to be in the credit side in L7. We're going to put negative 41. So there we have that. Now the rest of it then is going to be the interest receivable. That'll be the difference. We could think of it as the 165 minus the 41. But this interest receivable is what we recorded as we earned before. Or we can just take the difference between the whole thing, the debit minus the credit, should be that same difference. So let's do that plug formula first. I'm going to use a plug formula by saying negative sum. And then just highlight this whole thing. This is a positive number. These are negatives. The positive minus the negative. And then flip the sign. That's why there's a negative sum. So we're going to take these two numbers, in other words, 14141 minus the 14265. Now we could have taken 165 minus the 41 gives us that same 121, meaning total interest was 165, 41 if it was earned last time period, 124 then earned this time period. That then is going to go to the current income statement account of interest receivable. Interest receivable is a credit balance account. It being revenue, it always goes up in credit direction as is happening here. We're going to right click and copy. We're going to paste that in J8. Right click and paste 123. Now we're going to record this out, not to the general ledger, but to this little worksheet because this is a perfect little worksheet for the number of journal entries we'll have to see exactly what is going on. So we'll post this first cash. Cash is there. Cash is here. We're going to post it to U5, U5 equals, point to that 14265, it's going to bring the 25164 up by 14265 to 39 for 29. Then we have the note receivable for decomprenting here. We're going to post it to the note receivable on the trial balance there. We're going to post it in U12. Within U12 we're going to say equals and point to that 14100, bringing the 14100 down in the credit direction to zero. Then we're going to record this interest receivable. We're going to record it here, interest receivable in cell U13. So within U13 we will say equals, point to that 41, bringing the 41 balance down by 4120. Finally we'll post the interest receivable. Note we're out of balance of course by that 124 here until we record the last component. Interest receivable which is here on the trial balance, we are in cell U18. We're going to say equals, point to that 124, bring the balance from zero up by 124 in the credit direction, putting us back in balance. It also brings up net income. So note that net income is increasing by only the interest portion earned this time period although we're receiving the full interest, the 165 of interest, 41 of it having been earned last year, although it had not been received last year. Okay, so we're going to scroll back over and see what we have next, 32127 day note giving MI company and extension on past due accounts receivable. So same idea here, this company owes us money MI and they're not going to pay us yet and we're going to say okay well they're not going to pay us but we're going to charge you interest then moving it from the accounts receivable to the notes receivable, that initial journal entry being a very simple one but then we're going to have to calculate interest on it. In other words, we're going to go back over here, we're going to make a journal entry for this on 32 and we're going to say it's in accounts receivable, here's the 375 people owe us, here's MI in the subsidiary ledger, they owe us 6200 of that 37500. We need to bring that down not because they paid us, not because it's bad debt not because they're not going to pay us but because we're going to transfer it to a note receivable and charge interest for it due to the lateness of the payment. So what we're going to do is there's the accounts receivable, it's going to go down so we're going to do the opposite thing to it which is a credit. So I'm going to copy the receivable, right click and copy, I'm going to put it on the bottom in the credit so I'm going to put it on the bottom in J11, right click and paste, one, two, three. I'm going to put that in the credit column over here, it's going to be for that 6200, I'm going to represent the credit with a negative 6200. Then we're going to have a debit here in K10, within K10, we could just type it in there, I'm going to do a formula loan because that's how I like to do it. So we're going to say negative of that number, it'll take that number, flip the sign, make it a positive. Okay, now we just need to know what that account will be and it will be notes receivable. Note that within the notes receivable, we have a separate note receivable for every company that we have a note for and again like we said before that's a common practice to do to have that in a trial balance, a different account, it won't be that way on the financial statements, it'll be grouped in one account and some companies may only group it in one account on the trial balance, it's up to the company however, it will typically be supported by the subsidiary ledger which we'll put together after we record the journal entry in a similar way as this subsidiary ledger. So note, this subsidiary ledger is for the receivable and this list of accounts is another way of tracking the receivables that are notes receivable by who owes us money whereas we can also have a subsidiary type ledger for the notes receivable which can also be used to calculate the interest that will be due on the notes as we'll see. Okay, so we're going to copy that and that's going to be the debit in GA10, right click and paste 123. Let's record this, here's the notes receivable for MI that we're going to record, here it is on the trial balance and we're going to record that in U9. So within U9 we're going to say equals but we're going to point to that 6,200 bringing that zero balance by 6,202, 6,200 then we're going to record the other side accounts receivable has a credit here, accounts receivable up top here, we're going to record that in the cell U6. So within U6 we'll say equals and point to 6,200 credit bringing that 37,500 down in credit direction by 6,202, 31,100. Now we also want to record this 6,200 on the subsidiary ledger. So remember that they owe us here 6,200 breaking this number out down into who owes us the money. This person no longer owes us the money, the subsidiary ledger does not match at this point in time until we say that this person doesn't owe us, we're basically just posting the same information that same journal entry here. So I'm going to say this equals that 6,200 bringing the 6,200 down by 6,202, zero. Now if we add them all up all the customers that owe us money 3,200, 31,300 is the same as that 31,300 there. No effect on net income from this transaction. This was from the prior transaction. So no effect on net income. All we did was move it from one receivable to another receivable from a more short term receivable to a more long term receivable from an account receivable to a note receivable from a receivable that doesn't charge interest to one which does. Okay, enough of that. We're going to go back over here and we're going to record the interest calculation now. We're not going to do anything with it yet because we haven't earned any interest. This is what we expect to earn in interest over the time period of this note. So we're going to say that it's for 6,200. The rate is 7%. Once again, if I just type in 7, it will be formatted due to the format of Excel found in the home tab, numbers group and the percentage button. So then if we go down here, we multiply this out, the 6,200 times 7% will equals this 6,200 times the asterisk, so C18 times 7% in C19, giving us the 434. Now we're going to break this out into the number of days because remember, 7% means 7% a year, 434 then would be the interest for the entire year. If we have the loan for the entire year, which we do not, we will only have it out for 120 days. So we need to break this out to 120 days rather than interest of a year of 434. So I would think about doing that by first breaking it out into days, which would be 12 months times 30 days or 360. Again, that's an estimate, it would be 365. And then equals this 434 divided by the 360, giving us the $1.24. Note that this could be rounded. And Excel, if I go to the home tab, numbers and increased decimals, it's really not that same number. But as long as we use this cell and the calculation, Excel will use the exact number even though it only shows, I'm going to go in and remove that, the non-exact number. So just be aware of those little tricks in Excel. If you don't use Excel, you may want to use a ratio, which will be more exact. But this will be exact because this cell represents the real number, even though it only shows 121 rounded to the nearest penny. Okay, so then we're going to say that the number of days is going to be 120. And if there's $1.21 for 120 days, we multiply that out. We're going to say these 121 times 120 days gives us 144.67. I'm going to then round that by just putting it in this cell, which is already formatted for us, saying equals that 144.67, rounding it to 145. Okay, so let's do that same calculation a couple different ways just to practice our interest calculation. We could have done this by months. So notice we have a 120-day note. We divide that by 34 months. So we could say, okay, well what if we had this 434 for a year divided by 12 months? Means 36.166 per month times 4. That would give us that same number here. We can also use the ratio calculations that a lot of the textbooks would like to use, which would say that we have 120 days over 360 days or 0.33%, which could also be thought of as 4 months over 12 months, 0.33%. We take that times this interest 434 per year, 434. We get that same 144.67. So a couple ways you can calculate that again. This is the most intuitive way to calculate it to me, but you can see it any different way. You might see it any different way and you kind of got to figure out, you know, your method and reconcile to whatever methods being used and show them. Okay, so we're not going to do anything with this number yet because it's not due yet. We're just going to keep that until it becomes due and then we'll do something with that number. Next, we got 317.30-day 7% note giving a company and extension on-pass due accounts receivable. So same type of thing is happening here. We're going to say that any company scrolling back over and of course it's the same thing that's that problem we're doing here, but this is a company has accounts receivable included in that number become passed due. We're not giving up on it yet. What we're going to do is say a company, we're going to give you a note rather than accounts receivable. We're going to charge interest on the note. So we're just going to move that 3,800 from a receivable to another receivable from accounts receivable to notes receivable. So to do that, we're just going to go over here and we're going to say this is going to be on 317 and we're going to take it out of accounts receivable. This being a debit balance, we're going to make it go down doing the opposite thing to it. A credit. So I'm going to copy the accounts receivable in S6, right click and copy. Put that on the bottom. So we're in J14, right click and paste 1, 2, 3. Then we're going to put the credit. It'll be for how much is it for 3,800 negative 3,800 for the credit. Then we have a debit of something in K13. I'm going to do that by saying negative of that number, taking that number and flipping the sign. We could just type it in there. But I think it's better to use the formula and therefore we'll do so. And then we're going to indent this cell in J14, home tab, alignment, increase indenting. You could double click and just put the space bar three times or not do it at all and it's not a big deal. Okay.  It's going to be notes receivable. Notes receivable for a company is right there. It's still in the green. It's still a receivable. It still has a debit balance. It's going up in the debit direction by doing the same thing to it, another debit. So S11, right click and copy. We're going to put that up top in J13, right click and paste 123. Then we'll post this out. Here's the note receivable. We're going to post that out here. We're going to be in U11. So within U11, we're going to say equals and point to that 3800 and enter. And then in the accounts receivable here, that's going to be up in U6, there's something in it. Before we will double click on it, go to the end of it, say plus, then point to that accounts receivable and enter. Bring the balance down to 27,500. We also need to record it over here in the subsidiary ledger. So there's the accounts receivable. We need to record it here in Y21 to show that a company doesn't owe us the receivable for accounts receivable, but for notes receivable now. So we're going to say equals, point to that 3800 and enter. So now if we go down here, the accounts receivable went down. If we add up all the people that owe us money, it adds up to 27,500. That then now tying out to what's on the trial balance, 27,500. We're going to scroll back over here and we're going to calculate the interest in on this number. And note that this worksheet is kind of like a subsidiary ledger over here. So once again, note that you could just have one account here called notes receivable that would then be supported by a subsidiary ledger, a worksheet similar to the accounts receivable being supported by this subsidiary ledger. Or you can break it out. Again, if there's not too many of them, I kind of like to break it out and see it on the trial balance and then group them together when creating the financial statements into one notes receivable account. Okay. So we'll do that calculation for interest. We're not going to do anything with it yet. It's not going to matter until we get the payment. And remember, that's really kind of tricky for a lot of people when we first record these because you'll see a problem and it says 30 days interest note, you know, there's a lot going on here. And it's like, well, really, all we got to do is, you know, debit accounts receivable and credit notes receivable. What do we do with the interest in the number of days? Why do we have that information? Well, we have that information for when we get the payment to know how much we're going to earn on it, but we don't do anything with it until time passes because this represents earning revenue over time. Okay. So we're going to read, we're going to calculate this. So it's going to be 3,800. And once again, it's another 7% note and the 7% is formatted for us already home tab numbers percentage is how that is formatted. I'm going to underline it going to the home tab font group underline and then we'll multiply this out. Remember this is for an entire year, 7% for a year. Because the convention equals 3,800 times that 7%, giving 2,266 for the entire year. But we don't have the entire year. We only have 30 days one month. So I'm going to break it out into interest, not per year, but per day. And then multiply it times the number of days 30. So how many days in a year, we're going to say 12 times 30, or even 360, we're going to underline that home tab font underline, divide that out equals the 2,66 per year divided by 365 days in a year, giving 0.74 cents, 74 cents about per day. So then how many days, we said 30 days, 30 days. So 30 days, going to underline that home tab font underline, multiply it out 0.74 times 30 days 0.74 per day times 30 days or equals at 0.74 in d22 times 30 days d23 and enter 2217. I'm going to round it now. This cell already being formatted just saying equals, point it to that 2217 and 22 being the answer. Let's once again just run through, we're just going to practice our interest calculations here. So we could see this a couple different ways. We got this 266 per year. We could say, well, there's 12 months in a year. So 266 divided by 12 would be 22.166 per month times 30 days is one month times one would be that same number. We can also use our ratios. We can say that if we're talking about 30 days compared to divided by over 360 days in a year would be 0.0833 which is the same as saying one month over 12 months equivalent ratios would be 0.0833 times this 266 per year 266 gives us the 22166 again. This is the most intuitive way for me typically with months if I'm allowed to do so, but days if we're getting more specific ratios are often seen by textbooks since they just want to be aware of them. Okay. We're not going to do anything with that now. We're going to do something with that when we receive the money. Next one, we're going to say that a company dishonored her note and did not pay interest is recorded on the note at this time and the bounce due is adjusted back into accounts receivable. So now we're saying that a company didn't pay us. So we're going to go back over here and we're going to say, okay, now they didn't pay us and what we try to do is give them an extension and charge the interest on it and we still didn't get paid. So now we're going to take the note has expired and we didn't get paid for it. We're going to put it back into accounts receivable so that we can still track the owe us money even though the time period has passed. So we're going to scroll back over here and we're going to say when did this happen on four, I think it was for 16 was it, let's check it. Let's check it. It's on four two. So on four two, we're going to say that we had this note receivable from a company that's not going to be paid. We're going to put it back into accounts receivable. So we might want to think about, well, what did we, we didn't get any cash. Is cash affected? No. What did we get? Well, we're really just putting it back into the receivable. So it's going to have to go back up again. So here's a, it says the debit balance, we're going to make it go up by doing the same thing to it, which is another debit. So let's start with that. I'm going to copy the accounts receivable, right click and copy, put that on top in J16, right click and paste one, two, three. Now before thinking about the amounts, let's go to the other component here and that's going to be the fact that we need the accounts receivable here to go off the book, the notes receivable, I'd rather I should say. And it's on the books for 3,800. It needs to go back down to zero because we're moving it out of there into the accounts receivable. So I'm going to right click on that, copy that, it's got to go down with a credit. So we're going to put that underneath in J17, right click and paste one, two, three. I'm going to indent that, home tab, alignment, increase the indenting. Put that in the credit column in L17 with the amount of negative 3,800. Now that's going to be not the amount that we put in the receivable because we've earned revenue here and we've earned interest revenue at this point. So we're going to record the revenue as well. It's going to be down here, interest revenue, revenue, having a credit balance that only goes up in the credit correction direction and we're going to increase it by doing the same thing to it, another credit. So we'll copy S18, right click and copy the revenue. Put that in G18, right click and paste one, two, three. Then go into the home tab, alignment and increasing the indenting. Let's see what that revenue was. If we scroll back over here, we calculated it to be about $22. So that's going to be our credit amount, $22 in revenue in L18. I'm going to put a negative 22. For the debit to accounts receivable will include the original 3,800 plus the 22 or 3,822. I'm going to do that with our sum function, our negative sum function. I call this the plug function negative SUM. Double click that sum function. You could move this out of the way if you want by grabbing it and putting it up there and then highlight those four and enter. So now, of course, if we highlight the whole thing, it adds up to zero or the debit is 3,022 and the credit is also adding up to 3,022. Okay, so let's record this out. Now here's the accounts receivable in the journal entry. We're going to record that to the accounts receivable up here in the trial balance. Something's in the center cell, so we're going to double click on it. Go to the end of it and say plus, point to that 3,822 in the receivable bringing the balance up to 35,122. Then we have the notes receivable in A, so that will be here, notes receivable. We want to be in U13, double clicking on it, going to the end of it and plus and then pointing to that 3,800 bringing the balance down to zero. Then we're going to record the interest receivable here. So the interest receivable is here on the trial balance. Double clicking on U18 and going to the end plus pointing to that 22 and enter. So that brings the balance up by the interest receivable. We are recording revenue for the receivable or the interest earned even though we haven't earned it yet. Notice this, I'm sorry, it's this interest revenue up in saying interest receivable. Not a receivable. This isn't an asset. It's interest revenue increasing the net income. Okay, so now we're going to record the same amount for the accounts receivable in the subsidiary ledger. So the subsidiary ledger in other words is out of balance. It's red, 313 not matching the 35,122. It should be matching and therefore we're going to record this amount for a company. So A is right here and put that back on the books. So in X 22, we're just basically recording the same entry over here. So in X 22 equals and we're going to point to that 3822 and enter putting us back in balance bringing the balance up here 35,122 there matching 35,122 here next to transaction 62 where we say that MI company does not pay the note to do interest is recorded on the note at the time and balance due is adjusted back into accounts receivable. So we've got the same the same type of situation for the MI company not paying us. We're going to put it back into the accounts receivable. We can see that the original amount was 6,200. We took out of accounts receivable, put it into notes receivable. They then generated revenue of 145 of interest revenue therefore the 6,200 plus the 145 what's going to have to now go back into accounts receivable. So this is going to be 6,2 and remember that first this time we're going to say over here on I 19 6,2 actually probably should be on I 26,2 and we're going to say that the accounts receivable is going to go back up. So accounts receivable is going to go up because this company is not paying us that 6,200 going to go out of the notes receivable here into accounts receivable back to accounts receivable. So accounts receivable has a debit balance we need to make it to go up by doing the same thing to it another debit. So I'm going to right click and copy scroll down we're going to put that in a J20 right click and paste 123. Now remember the amount is going to be for this 6,200 plus the 145. So let's see if we can remember that equals the 6,200 plus the 145 is 6,345. So there we have the accounts receivable of 3,000 or 6,345. We're going to take the notes receivable off the books so here it is on the books it has a debit balance we're going to take it out by doing the opposite thing to it a credit. So I'm going to put my cursor in S9 right click and copy we're going to put that right underneath in J21 right click and paste 123 the amount then it's going to be 6,200 that needs to go off the books credit 6,200 difference is going to be the interest that is earned the revenue so revenue account here is going to be the difference we can do that a couple different ways I'm going to scroll back over it's 145 calculated here or it's what we need the 6,345 minus the 6,200 I'm going to do that with the plug formula negative SUM double-click the sum function highlight those cells 3,000 or 6,345 minus the 6,200 giving that 145 that's going to go to a credit to interest revenue so S18 and a right click and copy with that in J22 right click and paste 123 going to then highlight these two and indent so highlight these home tab alignment increase the indentation then we're going to record this out so accounts receivable is here here it is on the trial balance something's in it so we're going to double-click on you six go to the end of it and plus and point to that 6,345 and enter that brings the balance up then we're going to go to the notes receivable here that's here notes receivable it's going to go down double-clicking on a U9 double-click go to the end of it and plus point into that 6,200 bringing the balance down to zero then with the interest revenue is here in U18 double-clicking U18 going to the end plus point into that 145 and enter bringing the balance up and bringing that income up note that income is going up revenue is going up although we didn't receive any money no cash received at this point we earned revenue haven't gotten it yet and it's a little little skeptical as to whether we will given the fact they haven't paid us yet but it's going back in the receivable here we also need to put that in the receivable for in my it's going to go back on the books so we're going to put it in x8 which is basically recording the same amount by the subsidiary ledger by customer so that equals this three thousand six thousand three 45 bringing the balance back up then if we look at all the receivables it sums up to 41 467 which matches the 41 467 here on the trial balance next transaction we're going to scroll back over we're going to see that what do we have next so I received payment from my company for the mature the maturity value of the dishonored note plus interest per 45 days beyond the maturity at 7% and that was 46 days so we're going to now we're going to do another calculation for MI MI now just paid us it's in the receivable for accounts receivable but because of our prior arrangement they're going to pay us both the $21 or the 145 here plus they're going to give us interest earned in the extended time period that's been back in accounts receivable will calculate that interest now so we're going to say that the debt amount at this point in time is we're going to scroll over to the subsidiary ledger to see that so it's this six thousand three forty five so scrolling back over it's six thousand three forty five seven percent interest going to underline that home tab font group underline multiply that out this equals six thousand three forty five times seven percent enter we're going to multiply that time or divide by the number of days in a year equals 12 months times 30 about 360 days underline that home tab font group underline then we're going to divide that out in F 22 by saying equals this 444 15 divided by that 360 F 20 divided by F 21 or $1 and 23 cents a day and we said that there were how many days have 46 days past due 46 days past due going to underline that home tab font underline so then we'll multiply this out this equals the 123 times the 46 days enter now I'm just going to round that to the nearest dollar by saying equals pointing to that 5675 and just that sells just taking off the pennies here and that's doing that by the rounding function so they're still there technically for Excel so I saw those there they are but we're around it to 57 okay so now we're going to record the journal entry we're going to say we got payment so what's the date on this one time we got so this is on six to receive payment the note interest received payment so 717 717 so we're gonna say is cash affected yeah we got the cash so cash has a debit balance we're gonna make it to go up by doing the same thing another debit copy and cash gonna put that on top and g24 right-clicking and pasting 1 2 3 now the amount is going to be for this 6345 plus the $57 that we got for the interest so we could do that with a formula which we may have been should have been doing before make make things more specific so this cell plus this cell and enter and actually that that'll make it around it a little bit so let's not do that so it's actually we can say this equals six three four five plus 57 the reason I don't want to use this cell is because it's actually not that number remember it's really this number so when we post it will be off by pennies and rather just use round numbers over here okay so then we're gonna say that the accounts receivable is gonna be the other side of this so if we scroll back up we see accounts receivable here it's gonna have to go down so we're gonna do the opposite thing to it as a debit balance we're gonna do the opposite which is a credit copy the accounts receivable scrolling back down we're gonna put that in g25 right-click and paste 1 2 3 now the amounts not gonna be the 64002 it's gonna be that three thousand our six thousand three forty five so the right customer yeah six thousand three forty five so this is gonna be credit six three four five difference six thousand four or two minus six down three forty five is that fifty seven dollars so I'm gonna use the negative sum function negative SUM of these cells giving credit 57 that then being interest revenue interest revenue has a credit balance we're gonna make it go up doing the same thing to it another credit right click and copy put that in g26 right click and paste 1 2 3 gonna indent these two highlighting these two home tab alignment increase indenting then post it out here's the cash on journal entry here it is on the trial balance going to you five double clicking going to the end of it plus scrolling back down just a bit picking up that 64002 and enter there's that amount the next one counts receivable credit here's the counts receivable on the trial balance we're gonna be in column you you six double-click go to the end of it plus scrolling down a bit picking up that six thousand three forty five bring in accounts receivable down then we're gonna pick up the interest revenue here putting it there in you 18 double click go to the end of it plus there's the 57 and enter that brings net income up puts us back in balance now we did something to the accounts receivable so we need to post that same thing as well to the subsidiary ledger here's MIO and his money we're gonna be here in column y9 to take this balance back down y9 that's just where it happened to land so we're gonna be here equals point to that accounts receivable one more time and that means now that M company doesn't owe us anything at this time that should put the total we add them all up for all the customers of the subsidiary ledger at 35-122 matching what's on the trial balance


on that. But the great story is the one of the kid who really got the confidence. Yeah. So say your name and where you from. I'm Terry Osborne from Bellevue public schools. Um, the story I have is about how storytelling can make a difference. And in the kindergarten classrooms, we maybe spend 50% of our time telling stories. We don't always get to tell stories, but reading stories and telling stories is a great, um, fun thing to do. So, uh, one time I was reading a story, which I like to read every year, and it's called Who Way for Wadney, Watt, and it's by Helen Lester. And if a person has read this story, they have to know that Wadney is a rodent who can't say his ours. And that's why his name is Wadney. And Wadney gets teased a lot. But by the end of the story, he becomes a hero. So with this one kindergarten class, I was reading this story just like I always do when the kids were being entertained and liking it and so forth. And at the end of the story, that was that we just, you know, went on with whatever. And maybe three weeks later, we had a PTA activity and a mom came up to me and she said, you know, after you read that Rodney rat story, or Wadney Watt, my daughter came home and she told us the whole story. She just loved it. But what we noticed was before she couldn't say her ours. And after you read the story, she could say her ours. So how would I expect to have an impact on something as simple as that by reading a story? I didn't think that would ever happen. But the mom made a point to come and tell me that yeah, what you did made a difference because our kid can say her ours. And that gave her the child the confidence to work with language skills that you've been helping to instill. Yeah, and I'm sure the parents were like, well, how come you how come you learned to say your ours? You know, where did that come from? And she said it was from the book. Oh, that's so cool. So yeah, so I thought it was pretty neat to and I remembered that because it's just one of those things that libraries can do it. Thanks so much, Derek. You're welcome.