On January 1, 2010, Sands Company had Accounts Receivable $54,200 and Allowance

Question

On January 1, 2010, Sands Company had Accounts Receivable $54,200 and Allowance for Doubtful Accounts $3,700. Sands Company prepares financial statements annually and uses a perpetual inventory system. During the year the following selected transactions occurred.

Jan. 5 Sold $7,000 of merchandise to Norris Company, terms n/30. Cost of the merchandise sold was $4,000.
Feb. 2 Accepted a $7,000, 4-month, 9% promissory note from Norris Company for balance due.
Feb. 12 Sold $9,000 of merchandise costing $5,000 to Loflin Company and accepted Loflin's $9,000, 2-month, 10% note for the balance due.
Feb. 26 Sold $5,200 of merchandise costing $3,300 to Hossfeld Co., terms n/10.
Apr. 5 Accepted a $5,200, 3-month, 8% note from Hossfeld Co. for balance due.
Apr. 12 Collected Loflin Company note in full.
June 2 Collected Norris Company note in full.
June 15 Sold $2,000 of merchandise costing $1,500 to Madrid Inc. and accepted a $2,000, 6-month, 12% note for the amount due.

Journalize the transactions. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)

Explanation / Answer

Jan. 5 Acct Rxable Dr 7000 Sales A/C Cr 7000 Jan 5 Cost of goods sold Dr 4000 Merchandise inventory Cr 4000 (Sold merchandise on credit to Noris, recorded COGS also) Feb. 2 Note Rxable Dr 7000 Acct Rxable Cr 7000 (Accepted a $7,000, 4-month, 9% promissory note from Norris Company for balance due. Feb. 12 Note Rxable Dr 9000 Sales A/C Cr 9000 Feb 12 Cost of goods sold Dr 5000 Merchandise inventory Cr 5000 (Sold merchandise on credit to Loflin 2-month, 10% note $9000, recorded COGS also) Feb 26 Acct Rxable Dr 5200 Sales A/C Cr 5200 Feb 26 Cost of goods sold Dr 3300 Merchandise inventory Cr 3300 (Sold merchandise costing to Hossfeld Co., terms n/10) Apr. 5 Note Rxable Dr 5200 Acct Rxable Cr 5200 (Accepted a 3-month, 8% note from Hossfeld Co. for balance due) Apr. 12 Cash Dr 9150 Note Rxable Cr 9000 Int Revenue Cr 150 (Collected Loflin Company note 2-month, 10% note $9000, Int =10%*9000*2/12=150 in full.) June 2 Cash Dr 7210 Note Rxable Cr 7000 Int Revenue Cr 210 (Collected Norris Company note $7,000, 4-month, 9%, Int =9%*7000*4/12=210 in full.) June 15 Note Rxable Dr 2000 Sales A/C Cr 2000 June 15 Cost of goods sold Dr 1500 Merchandise inventory Cr 1500 (Sold merchandise to Madrid Inc. and accepted a $2,000, 6-month, 12% note for the amount due)

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