Jan. 3. Loaned $18,000 cash to Trina Gelhaus, receiving a 90-day, 8% note.
Feb.
10. Sold merchandise on account to Bradford & Co., $24,000. The cost of the merchandise sold was $14,400.
13. Sold merchandise on account to Dry Creek Co., $60,000. The cost of merchandise sold was $54,000.
Mar.
12. Accepted a 60-day, 7% note for $24,000 from Bradford & Co. on account.
14. Accepted a 60-day, 9% note for $60,000 from Dry Creek Co. on account.
Apr.
3. Received the interest due from Trina Gelhaus and a new 120-day, 9% note as a renewal of the loan of January 3. (Record both the debit and the credit to the notes receivable account.)
May
11. Received from Bradford & Co. the amount due on the note of March 12.
13. Dry Creek Co. dishonored its note dated March 14.
July 12. Received from Dry Creek Co. the amount owed on the dishonored note, plus interest for 60 days at 12% computed on the maturity value of the note.
Aug. 1. Received from Trina Gelhaus the amount due on her note of April 3.
Oct.
5. Sold merchandise on account to Halloran Co., $13,500. The cost of the merchandise sold was $8,100.
15. Received from Halloran Co. the amount of the invoice of October 5, less 2% discount.
Instructions
Journalize the entries to record the transactions.
Answer:
Jan. 3 Notes Receivable 18,000
Cash 18,000
Feb. 10 Accounts Receivable—Bradford & Co. 24,000
Sales 24,000
10 Cost of Merchandise Sold 14,400
Merchandise Inventory 14,400
13 Accounts Receivable—Dry Creek Co. 60,000
Sales 60,000
13 Cost of Merchandise Sold 54,000
Merchandise Inventory 54,000
Mar. 12 Notes Receivable 24,000
Accounts Receivable—Bradford & Co. 24,000
14 Notes Receivable 60,000
Accounts Receivable—Dry Creek Co. 60,000
Apr. 3 Notes Receivable 18,000
Cash 360
Notes Receivable 18,000
Interest Revenue 360
($18,000 × 8% × 90/360).
May 11 Cash 24,280
Notes Receivable 24,000
Interest Revenue 280
($24,000 × 7% × 60/360).
13 Accounts Receivable—Dry Creek Co. 60,900
Notes Receivable 60,000
Interest Revenue 900
($60,000 × 9% × 60/360).
July 12 Cash 62,118
Accounts Receivable—Dry Creek Co. 60,900
Interest Revenue 1,218
($60,900 × 12% × 60/360).
Aug. 1 Cash 18,540
Notes Receivable 18,000
Interest Revenue 540
($18,000 × 9% × 120/360).
Oct. 5 Accounts Receivable—Halloran Co. 13,500
Sales 13,500
5 Cost of Merchandise Sold 8,100
Merchandise Inventory 8,100
15 Cash 13,230
Sales Discounts 270
Accounts Receivable—Halloran Co. 13,500