P9-6A Prepare entries for various notes receivable transactions . (LO 1, 2, 3, 4
ID: 2456306 • Letter: P
Question
P9-6A
Prepare entries for various notes receivable transactions.
(LO 1, 2, 3, 4)
Farwell Company closes its books monthly. On September 30, selected ledger account balances are:
Notes Receivable
$37,000
Interest Receivable
183
Notes Receivable include the following.
Date
Maker
Face
Term
Interest
Aug.16
K. Goza Inc.
$12,000
60 days
8%
Aug.25
Holt Co.
9,000
60 days
7%
Sept. 30
Noblitt Corp.
16,000
6 months
9%
Interest is computed using a 360-day year. During October, the following transactions were completed.
Oct. 7
Made sales of $6,900 on Farwell credit cards.
12
Made sales of $900 on MasterCard credit cards. The credit card service charge is 3%.
15
Added $460 to Farwell customer balances for finance charges on unpaid balances.
15
Received payment in full from K. Goza 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.)
Instructions
(a)
Journalize the October transactions and the October 31 adjusting entry for accrued interest receivable.
(b)
Enter the balances at October 1 in the receivable accounts. Post the entries to all of the receivable accounts. There was no opening balance in accounts receivable.
Accounts receivable $16,465
(c)
Show the balance sheet presentation of the receivable accounts at October 31.
Total receivables $32,585
Notes Receivable
$37,000
Interest Receivable
183
Explanation / Answer
Part A)
The journal entries are given below:
____________
Part B)
____________
____________
____________
Part C)
Date Account Titles Debit Credit Oct 7 Accounts Receivables $6,900 Sales $6,900 Oct 12 Cash/Bank $873 Service Fee Expense (900*3%) $27 Sales $900 Oct 15 Accounts Receivable $460 Interest Revenue $460 Oct 15 Cash $12,160 Notes Receivable $12,000 Interest Revenue (12,000*8%*60/360) $160 Oct 24 Accounts Receivable $9,105 Notes Receivable $9,000 Interest Revenue $105 Oct 31 Interest Receivable (16,000*9%*1/12) 120 Interest Revenue $120Related Questions
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