this is a though one Problem 9-6A Farwell Company loses its books monthly. on Se

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this is a though one

Problem 9-6A Farwell Company loses its books monthly. on September 30, selected ledger account balances are are: Notes Receivable Interest Receivable $46,800 303 Notes Receivable include the following. Maker itfitlliFace Aug. 16 Aug. 25 Sept. 30 K. Goza Inc. Holt Co. Noblitt Corp. $ 15,600 12,000 19,200 60 days 60 days 6 months 10% 9% 11% Interest is computed using a 360-day year During October, the followina transactions were completed. Oct. 7 Made sales of $6,700 on Farwell credit cards Interest is computed using a 360-day year, During October, the following transactions were completed. 12 Made sales of $900 on MasterCard credit cards. The credit card service charge is 2%. 15 Added $460 to Farwell customer balances for finance charoes 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 th

Explanation / Answer

(a)

Oct

7

Accounts Receivable

$ 6,700

Sales

$ 6,700

Oct

12

Cash ($900 – $18)

$ 882

Service Charge Expense ($900 X 2%)

$ 18

Sales

$ 900

Oct

15

Accounts Receivable

$ 460

Interest Revenue

$ 460

Oct

15

Cash

$ 15,860

Notes Receivable

$ 15,600

Interest Receivable ($15,600 X 10% X 45/360)

$ 195

Interest Revenue ($15,600 X 10% X 15/360)

$ 65

Oct

24

Accounts Receivable - Holt

$ 12,180

Notes Receivable

$ 12,000

Interest Receivable ($12,000 X 9% X 36/360)

$ 108

Interest Revenue ($12,000 X 9% X 24/360)

$ 72

Oct

31

Interest Receivable ($19,200 X 11% X 1/12)

$ 176

Interest Revenue

$ 176

(b)

Notes Receivable

Date

Explanation

Ref.

Debit

Credit

Balance

Oct. 1

Balance

$46,800

15

$15,600

$31,200

24

$12,000

$19,200

Accounts Receivable

Date

Explanation

Ref.

Debit

Credit

Balance

Oct. 7

$6,700

$6,700

15

$460

$7,160

24

$12,180

$19,340

Interest Receivable

Date

Explanation

Ref.

Debit

Credit

Balance

Oct. 1

Balance

$303

15

$195

$108

24

$108

$0

31

$176

$176

(c)

Current assets

Notes receivable

$ 19,200

Accounts receivable

$19,340

Interest receivable

$176

Total receivables

$ 38,716

Oct

7

Accounts Receivable

$ 6,700

Sales

$ 6,700

Oct

12

Cash ($900 – $18)

$ 882

Service Charge Expense ($900 X 2%)

$ 18

Sales

$ 900

Oct

15

Accounts Receivable

$ 460

Interest Revenue

$ 460

Oct

15

Cash

$ 15,860

Notes Receivable

$ 15,600

Interest Receivable ($15,600 X 10% X 45/360)

$ 195

Interest Revenue ($15,600 X 10% X 15/360)

$ 65

Oct

24

Accounts Receivable - Holt

$ 12,180

Notes Receivable

$ 12,000

Interest Receivable ($12,000 X 9% X 36/360)

$ 108

Interest Revenue ($12,000 X 9% X 24/360)

$ 72

Oct

31

Interest Receivable ($19,200 X 11% X 1/12)

$ 176

Interest Revenue

$ 176

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