The following were selected from among the transactions completed by Caldemeyer
ID: 2447671 • Letter: T
Question
The following were selected from among the transactions completed by Caldemeyer Co. during the current year. Caldemeyer Co. sells and installs home and business security systems.
Jan. 3. Loaned $21,600 cash to Trina Gelhaus, receiving a 90-day, 8% note. Feb. 10. Sold merchandise on account to Bradford & Co., $25,200. The cost of the merchandise sold was $15,120. 13. Sold merchandise on account to Dry Creek Co., $55,200. The cost of merchandise sold was $49,680. Mar. 12. Accepted a 60-day, 8% note for $25,200 from Bradford & Co. on account. 14. Accepted a 60-day, 9% note for $55,200 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., $14,500. The cost of the merchandise sold was $8,700. 15. Received from Halloran Co. the amount of the invoice of October 5, less 2% discount.Explanation / Answer
Jan-03 Notes receivable - 8% Dr 21600 Cash Cr 21600 ( To record loan given in lieu of note at 8%) Feb-10 Accounts receivable Dr 25200 Sales Cr 25200 ( To record sales to Bradford & Co) Feb-10 Cost of goods sold Dr 15120 Inventory Cr 15120 ( To record cost of goods sold for the above sale) Mar-12 Notes receivable - 8% Dr 25200 Accounts Receivable Cr 25200 ( To record 8% note received in lieu of cash) Mar-14 Notes receivable - 9% Dr 55200 Accounts Receivable Cr 55200 ( To record 9% note received in lieu of cash) Apr-03 Cash Dr 426.08 Interest Income Cr 426.08 ( To record interest received 8% of 21600 for 90 days) =8/100*21600/365*90 = 426.08 Apr-03 Notes Receivable - 9% Dr 21600 Notes Receivable - 8% Cr 21600 ( To record renewal of loan) May-11 Cash Dr 25531.40 Interest Income Cr 331.40 Notes Receivable - 8% Cr 25200 ( To record amount received against note of Mar 12) Interest = 8% * 25200/365*60 May-13 Accounts receivable Dr 55200 Notes Receivable - 9% Cr 55200 ( To record dishonouring of notes receivable) Jul-12 Cash Dr 56304.99 Accounts receivable Cr 55200 Interest Income Cr 1104.99 ( To record amount receiived with interest from Dry creek) Interest for 60 days @ 9% = 9% of 55200/365* 60 = 816.66 Hence, maturity value = 55200 + 816.66 =56016.66 56016.66 Now interest is to be paid @ 12% on maturity value for 60 days = 12% of 56016.66/365*60 = 1104.99 Aug-01 Cash Dr 22239.12 Notes Receivable - 9% Cr 21600 Interest Income Cr 639.12 ( To record cash received in lieu of note of Apr 3) Interest = 21600*9%/4365*120 = 639.12 Oct-05 Accounts receivable Dr 14500 Sales Cr 14500 ( To record sales to Halloran Co) Oct-05 Cost of goods sold Dr 8700 Inventory Cr 8700 ( To record cost of goods sold for the above sale) Oct-15 Cash Dr 14210 Discount Dr 290 Accounts receivable Cr 14500 ( To record cash received with 2% discount from above sale) Discount = 2% of 14500 =290
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