On january 1,2018 carly company has account receivable $109,000 and allowance fo

Question

On january 1,2018 carly company has account receivable $109,000 and allowance for doubtful accounts $10,000. carly prepares financial statement annually. During the year the following selected transactions occurred.

Jan 5 Sold $12,000 of merchandise to Sam company terms n/30

Feb 2 Accepted a $12,000, 4-month, 10% promissory note from sam company for the balance due.

Feb 12 Sold$15,000 of merchandise to Neville company and accepted neville $15,000, 2-month , 10% note for the balance due.

Apr 12 Collected Neville company note in full

Jun 2 Collected sam company note in full

July 15 Sold $11,000 of merchandise to Hut co. and accepted Hut $11,000, 3-month, 12% note for the amount due.

Oct 15 Hut Co's note was dishonored. Hut Co. is bankrupt, and there is no hope of future settlement.

A) Journalize the transaction?

Explanation / Answer

Solution:

Jan-05 Accounts receivables - Sam 12000

Sales 12000

Feb-02 Notes receivable 12000

Accounts receivable - Sam 12000

Feb-12 Notes receivable 15000

Sales 15000

Apr-12 Cash 15250

Notes receivable 15000

Interest revenue 250

Interest revenue = 15000 x 0.10 x 2/12

Jun 2   

Cash 12400

Notes receivable 12000

Interest revenue 400

Interest revenue = 12000 x 0.10 x 4/12

July-15 Notes receivable 11000

Sales 11000

Oct-15 Allowance for doubtful account 11000

Notes Receivable 11000

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