Farwell Company closes its books monthly. On September 30, selected ledger accou
ID: 2399324 • Letter: F
Question
Farwell Company closes its books monthly. On September 30, selected ledger account balances are Notes Receivable Interest Receivable $35,400 195 Notes Receivable include the following Term Interest Date Aug. 16 Aug. 25 Sept. 30 obitt Corp Maker Face K. Gaza Inc Holt Co $ 13,200 60 days 9,000 60 days 13,200 6 months 8% 7% 9% Interest is computed using a 360-day year. During October, the following transactions were completed Oct Made sales of $6,800 on Farwell credit cards 12 Made sales of $700 on MasterCard credit cards. The credit card service charge is 2% 15 Added $460 to Farwell customer balances for finance charges on unpaid balances 15 Received payment in full from K. Gaza Inc. on the amount due 24 Received notice that the Holt note has been dishonored. (Assume that Holt is expected to pay in the future.) (a) Journalize the October transactions and the October 31 adjusting entry for the accrued interest receivable (b) Enter the balances at October 1 in the receivable accounts. Post the entries to all of the receivable accounts. (Post entries in the order of journal entries presented in the previous part.) (c) Show the balance sheet presentation of the receivable accounts at October 31Explanation / Answer
Part A
Part B
Notes receivable
Accounts receivable
Interest receivable
Part C
Farwell company
Balance sheet (partial)
October 31
Current assets
Notes receivable............. 13200
Accounts receivable....... 16365
Interest receivable.......... 99
Total receivables.......................................... 29664
Date account titles and explanation debit credit Oct 7 accounts receivable 6800 Sales revenue 6800 Oct 12 cash (700-14) 686 Service charge expense (700*2%) 14 Sales revenue 700 Oct 15 accounts receivable 460 Interest revenue 460 Oct 15 cash 13376 Notes receivable 13200 Interest receivable (13200*8%*45/360) 132 Interest revenue (13200*8%*15/360) 44 Oct 24 accounts receivable 9105 Notes receivable 9000 Interest receivable (9000*7%*36/360) 63 Interest revenue (9000*7%*24/360) 42 Oct 31 interest receivable (13200*9%*1/12) 99 Interest revenue 99Related Questions
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