Jan. 3 Loaned $21,600 cash to Trina Gelhaus, receiving a 90-day, 7% note. Feb. 1
ID: 2403904 • Letter: J
Question
Jan. 3 Loaned $21,600 cash to Trina Gelhaus, receiving a 90-day, 7% note. Feb. 10 Sold merchandise on account to Bradford & Co., $26,400. The cost of the goods sold was $15,840. 13 Sold merchandise on account to Dry Creek Co., $63,600. The cost of goods sold was $57,240. Mar. 12 Accepted a 60-day, 8% note for $26,400 from Bradford & Co. on account. 14 Accepted a 60-day, 9% note for $63,600 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, terms 2/10, n/30, to Halloran Co., $12,500. Record the sale net of the 2% discount. The cost of the goods sold was $7,500. 15 Received from Halloran Co. the amount of the invoice of October 5, less 2% discount.
Explanation / Answer
January:-
3/1
Trina Loan a/c Dr $21600
to cash a/c $21600
(@7% for 90days)
February:-
10/2
1.Bradford & co a/c Dr $26400
to sales a/c $26400
2.
sales a/c Dr $26400
to cost of goods sold a/c $15840
to trading a/c (profit) $10560
13/2
1.Drycreek & co a/c Dr $63600
to sales a/c $63600
2.
sales a/c Dr $63600
to cost of goods sold a/c $57240
to trading a/c (profit) $6360
march:-
12/3
Bills receivable a/c Dr $26400
to Bradford a/c $26400
(@8% for 60days)
14/3
Bills receivable a/c Dr $63600
to Drycreek & co a/c $63600
(@9% for 60days)
April:-
3/4
1.interest a/c Dr $378 (21600*7%*90/360)
to cash a/c $378
2.old entry should be cancelled since it is renewed.
cash a/c Dr $21600
to trina a/c $21600
(@7% for 90days)
new entry.
Trina a/c Dr $21600
to cash a/c $21600
(@9% for 120days)
may:-
11/5
cash a/c Dr $26752
to interest a/c $352 (26400*60/360*8%)
to Brandford & co a/c $26400
2. interest a/c Dr $352
to P/L a/c $352
JULY:-
12/7
cash a/c Dr $67136
to interest a/c $3536 (63600*60/360*9%) = 954
[954+63600]*12%*120/360 = 2582
to Brandford & co a/c $63600
2. interest a/c Dr $3136
to P/L a/c $3136
AUGUST
1/8
cash a/c Dr $22248
to interest a/c $648
to trina a/c $21600
OCTOBER
5/10
1.halloran & co a/c Dr $12250
trade discount a/c Dr $250 (2% on 12500)
to sales a/c $12500
2.
sales a/c Dr $12500
to cost of goods sold a/c $7500
to trading a/c (profit) $5000
3. P/L a/c Dr $250
to trade discount a/c $250
15/10
interest a/c Dr $6.81
to P/L a/c $6.81
cash a/c Dr $12256.81
to interest a/c $6.81
to halloran and co a/c $12250
total sales = 102500
less
cost = (80580)
trade profit = 21920
total interest = 4920.81
total income = 26840.81$
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