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Based on the image you uploaded, it shows a problem about notes receivable transactions involving the Danica Company and Miranda Lee. The specific exercise you're working on involves the calculation of interest on a $18,000 note, which is granted to Miranda Lee for a 45-day extension at a 2% interest rate, using a 360-day year convention.

### Steps to Solve:
1. **Calculate the interest amount:**
   - **Principal (P):** $18,000
   - **Interest rate (R):** 2% annually
   - **Time (T):** 45 days
   - **Time in years (T in years):** 45/360 = 0.125 years

   The interest formula is:
   \[
   \text{Interest} = P \times R \times T
   \]
   Substituting the values:
   \[
   \text{Interest} = 18,000 \times 0.02 \times 0.125 = 45 \text{ dollars}
   \]

2. **Journal Entry:**
   You will need to record the acceptance of the note and the accrued interest at December 31st, based on the interest calculation.

Would you like further details on journal entries or other aspects? Let me know if you'd like additional breakdowns.

Here are 5 related questions that can help expand your understanding:
1. What would the journal entry look like for recording the note receivable and accrued interest?
2. How does using a 360-day year convention affect interest calculations compared to a 365-day year?
3. What would happen if the note was for 60 days instead of 45 days—how would the interest change?
4. How are interest-bearing notes and non-interest-bearing notes treated differently in accounting?
5. What impact does the time extension on a receivable have on a company's financial statements?

**Tip:** When calculating interest, always ensure you're consistent with the time period and the interest rate convention used (e.g., 360 days or 365 days). This can significantly affect your calculations!

Complete the table to calculate the interest amounts at December 31st and use the calculated value to prepare your journal entries. Note: Do not round your intermediate calculations. Use 360 days a year.

Calculate the interest on an $18,000 note for 45 days at a 2% interest rate, using a 360-day year, as part of the Danica Company’s journal entry. Learn how to compute the interest and prepare adjusting entries for the note receivable.

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