Exercise 8-10 Sunland Supply Co. has the following transactions: Loaned $65,000

Question

Exercise 8-10 Sunland Supply Co. has the following transactions: Loaned $65,000 cash to A. Morgan on a one-year, 7% note. Sold goods to H. Giorgi on account for $12,600, terms n/30. The goods cost Sunland $7,875. Sunland uses the perpetual inventory system Sold goods to Wrightman, Inc., receiving a $22,050, three-month, 5% note. The goods cost Sunland $14,700. H. Giorgi was unable to pay her account. Giorgi gave Sunland a six-month, 6% note in settlement of her account. Nov. 1 15 Dec. 1 15 31 Accrued interest revenue on all notes receivable. Interest is due at maturity Mar. 1 Collected the amount owing on the Wrightman note. une 15 H. Giorgi defaulted on the note. Future payment is expected Record the transactions for Sunland Supply Co. (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter "O" for the amounts. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Credit Accounts Receivable Morgan Accounts Receivable Giorgi Cash Cost of Goods Sold Interest Receivable Interest Revenue Merchandise Inventory Notes Receivable Morgan Notes Receivable Wrightman Notes Receivable Giorgi No Entry ount) (To record cost of merchandise sold To record sale)

Explanation / Answer

Date Accounts title Dr Cr 1 nov Notes receivable-morgan 65000 To cash 65000 15 nov Accounts receivable-Giorgi 12600 To sales 12600 cost of goods sold 7875 To Merchandise inventory 7875 1 Dec notes receivable-wrightman 22050 To sales 22050 cost of goods sold 14700 To Merchandise inventory 14700 15 Dec notes receivable-Giorgi 12600 To Accounts receivabel-Giorgi 12600 31 Dec Interest receivable 882 To interest revenue 882 Note:-Giorgi = 12600* 6%/12 * 0.5 months = 32 wrightman = 22050 * 5%/12 * 1 = 92 Morgan =65000 * 7% /12* 2 months = 758 1 Mar Cash 22142 To interest receivable 92 To notes receivable-wrightman 22050 15 June Accounts receivable-Giorgi 12600 Interest receivable [(12600 * 6%/12 * 6 month) - 32] 346 To notes receivable-Giorgi 12600 To interest revenue 346

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