On January 1, 2010, Sands Company had Accounts Receivable $56,900 and Allowance
ID: 2389639 • Letter: O
Question
On January 1, 2010, Sands Company had Accounts Receivable $56,900 and Allowance for Doubtful Accounts $4,070. Sands Company prepares financial statements annually and uses a perpetual inventory system. During the year the following selected transactions occurred.Jan. 5 Sold $7,700 of merchandise to Norris Company, terms n/30. Cost of the merchandise sold was $4,760.
Feb. 2 Accepted a $7,700, 4-month, 9% promissory note from Norris Company for balance due.
Feb. 12 Sold $15,000 of merchandise costing $5,350 to Loflin Company and accepted Loflin's $15,000, 2-month, 10% note for the balance due.
Feb. 26 Sold $5,490 of merchandise costing $4,980 to Hossfeld Co., terms n/10.
Apr. 5 Accepted a $5,490, 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 $2,460 of merchandise costing $2,350 to Madrid Inc. and accepted a $2,460, 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 sold $7,700 of merchandise to Norris Company, terms n/30. Cost of the merchandise sold was $4,760.
Dr.. Accounts Receivable 7,700
Cr.. Sales 7,700
Dr.. Cost of Goods Sold 4,760
Cr.. Merchandise Inventory 4,760
Feb. 2 Accepted a $7,700, 4-month, 9% promissory note from Norris Company for balance due.
Dr.. Notes Receivable 7,700
Cr.. Accounts Receivable 7,700
Feb. 12 Sold $15,000 of merchandise costing $5,350 to Loflin Company and accepted Loflin's $15,000, 2-month, 10% note for the balance due.
Dr.. Notes Receivable $15,000
Cr.. Sales $15,000
Dr.. Cost of Goods Sold $5,350
Cr.. Merchandise Inventory $5,350
Feb. 26 Sold $5,490 of merchandise costing $4,980 to Hossfeld Co., terms n/10
Dr.. Accounts Receivable $5,490
Cr.. Sales $5,490
Dr.. Cost of Goods Sold $4,980
Cr.. Merchandise Inventory $4,980
Apr. 5 Accepted a $5,490, 3-month, 8% note from Hossfeld Co. for balance due
Dr.. Notes Receivable $5,490
Cr.. Accounts Receivable $5,490
Apr. 12 Collected Loflin Company note in full
15000 x 10% x 2/12 = 250 Interest
Dr.. Cash 15,250
Cr.. Interest Revenue 250
Cr.. Notes Receivable 15,000
June 2 Collected Norris Company note in full.
7,700 x 9% x 4/12 = 231 Interest
Dr.. Cash 7,931
Cr.. Interest Revenue 231
Cr.. Notes Receivable 7,700
June 15 Sold $2,460 of merchandise costing $2,350 to Madrid Inc. and accepted a $2,460, 6-month, 12% note for the amount due.
Dr.. Notes Receivable $2,460
Cr.. Sales $2,460
Dr.. Cost of Goods Sold $2,350
Cr.. Merchandise Inventory $2,350
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