Problem 9-7A On January 1, 2017, Harter Company had Accounts Receivable $132,800
ID: 2393709 • Letter: P
Question
Problem 9-7A
On January 1, 2017, Harter Company had Accounts Receivable $132,800, Notes Receivable $42,000, and Allowance for Doubtful Accounts $31,400. The note receivable is from Willingham Company. It is a 4-month, 9% note dated December 31, 2016. Harter Company prepares financial statements annually at December 31. During the year, the following selected transactions occurred.
Jan. 5Sold $37,200 of merchandise to Sheldon Company, terms n/15.
20Accepted Sheldon Company’s $37,200, 3-month, 8% note for balance due.Feb. 18Sold $26,000 of merchandise to Patwary Company and accepted Patwary’s $26,000, 6-month, 9% note for the amount due.Apr. 20Collected Sheldon Company note in full.
30Received payment in full from Willingham Company on the amount due.
May 25Accepted Potter Inc.’s $22,000, 3-month, 9% note in settlement of a past-due balance on account.Aug. 18Received payment in full from Patwary Company on note due.
25The Potter Inc. note was dishonored. Potter Inc. is not bankrupt; future payment is anticipated.
Sept. 1Sold $12,400 of merchandise to Stanbrough Company and accepted a $12,400, 6-month, 10% note for the amount due.
Explanation / Answer
Jan. 5 Sold $37,200 of merchandise to Sheldon Company, terms n/15
Dr Accounts Receivable 37,200
Cr Sales 37,200
Jan 20 Accepted Sheldon Company’s $37,200, 3-month, 8% note for balance due.
Dr Notes Receivable 37,200
Cr Accounts Receivable 37,200
Feb. 18 Sold $26,000 of merchandise to Patwary Company and accepted Patwary’s $26,000, 6-month, 9% note for the amount due..
Dr Notes Receivable 26,000
Cr Sales 26,000
Apr. 20 Collected Sheldon Company note in full.
Dr Cash 37,944
Cr Notes Receivable 37,200
Cr Interest Revenue 744 (37,200 x 8% x 3/12)
30 Received payment in full from Willingham Company on the amount due.
Dr Cash 43260
Cr Notes Receivable 42,000
Cr Interest Revenue 1260 (42,000 x 9% x 4/12)
May 25 Accepted Potter Inc.’s $22,000, 3-month, 9% note in settlement of a past-due balance on account.
Dr Notes Receivable 22,000
Cr Accounts Receivable 22,000
Aug. 18 Received payment in full from Patwary Company on note due.
Dr Cash 27170
Cr Notes Receivable 26,000
Cr Interest revenue 1170 ($26,000 x 9% x 6/12)
25 The Potter Inc. note was dishonored. Potter Inc. is not bankrupt; future payment is anticipated.
Dr Accounts Receivable 22495
Cr Notes Receivable 22,000
Cr Interest Revenue 495
Sept. 1 Sold $12,400 of merchandise to Stanbrough Company and accepted a $12,400, 6-month, 10% note for the amount due.
Dr Notes Receivable 12,400
Cr Sales 12,400
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