Apr. 18. Received a $60,000, 30-day, 7% note dated April 18 from Glenn Cross on account.
30. Received a $42,000, 60-day, 8% note dated April 30 from Rhoni Melville on account.
May 18. The note dated April 18 from Glenn Cross is dishonored, and the customer’s account is charged for the note, including interest.
June 29. The note dated April 30 from Rhoni Melville is dishonored, and the customer’s account is charged for the note, including interest.
Aug. 16. Cash is received for the amount due on the dishonored note dated April 18 plus interest for 90 days at 8% on the total amount debited to Glenn Cross on May 18.
Oct. 22. Wrote off against the allowance account the amount charged to Rhoni Melville on June 29 for the dishonored note dated April 30.
Answer:
Apr. 18 Notes Receivable 60,000
Accounts Receivable—Glenn Cross 60,000
30 Notes Receivable 42,000
Accounts Receivable—Rhoni Melville 42,000
May 18 Accounts Receivable—Glenn Cross 60,350
Notes Receivable 60,000
Interest Revenue 350
($60,000 × 7% × 30/360).
June 29 Accounts Receivable—Rhoni Melville 42,560
Notes Receivable 42,000
Interest Revenue 560
($42,000 × 8% × 60/360).
Aug. 16 Cash 61,557
Accounts Receivable—Glenn Cross 60,350
Interest Revenue 1,207
($60,350 × 8% × 90/360).
Oct. 22 Allowance for Doubtful Accounts 42,560
Accounts Receivable—Rhoni Melville 42,560