Date Maker Face Term Interest Date Account Titles and Explanation Debit Credit O
ID: 2452605 • Letter: D
Question
Date
Maker
Face
Term
Interest
Date
Account Titles and Explanation
Debit
Credit
Oct. 7
Oct. 12
Oct. 15
Oct. 15
Oct. 24
Oct. 31
Notes Receivable
Date
Explanation
Ref
Debit
Credit
Balance
Balance
?
Accounts Receivable
Date
Explanation
Ref
Debit
Credit
Balance
Interest Receivable
Date
Explanation
Ref
Debit
Credit
Balance
Balance
?
FARWELL COMPANY
Balance Sheet (Partial)
October 31
Notes Receivable $29,100 Interest Receivable 101
Notes Receivable include the following.
Date
Maker
Face
Term
Interest
Aug. 16 K. Goza Inc. $ 8,400 60 days 6% Aug. 25 Holt Co. 7,500 60 days 5% Sept. 30 Noblitt Corp. 13,200 6 months 7%Interest is computed using a 360-day year. During October, the following transactions were completed.
Oct. 7 Made sales of $6,980 on Farwell credit cards. 12 Made sales of $800 on MasterCard credit cards. The credit card service charge is 2%. 15 Added $520 to Farwell customer balances for finance charges on unpaid balances. 15 Received payment in full from K. Goza Inc. on the amount due. 24 Received notice that the Holt note has been dishonored. (Assume that Holt is expected to pay in the future.)
Explanation / Answer
Date Account Titles and Explanation Debit ($) Credit ($) Oct. 7 Accounts receivable 6980 Sales 6980 (Made sales of $6,980 on Farwell credit cards) Oct. 12 Accounts receivable 784 Credit Card Expense 16 Sales 800 (Made sales of $800 on MasterCard credit cards. The credit card service charge is 2% of $800 = $16) Oct. 15 Accounts receivable 520 Finance charge 520 (Added $520 to Farwell customer balances for finance charges on unpaid balances) Oct. 15 Cash 8484.00 Interest on Notes recievable 84 Notes receivable 8400 (Received payment in full from K. Goza Inc. on the amount due including interest of $84 received for 60 days @6% on $8400) Oct. 24 Accounts Receivable 7500 Interest accrued 62.5 Notes Receivable 7500 Interest on notes receivable 62.5 ( Holt note has been dishonored. The interest to be recived on $7500 for 60 days @ 7% has been charged and accounted for) Oct. 31 Interest accrued 79.56667 Interest on Notes receivable 79.56667 (accrued interest on notes payable from Noblitt Corp. For 31 days accounted for) Notes Receivable Date Explanation Ref Debit Credit Balance Sep-30 Balance 29100 Oct-15 K. GoZA Inc. cash notes receivable 20700 Oct-24 Holt Co. cash Accounts receivable 13200 Oct-31 Balance 13200 Accounts Receivable Date Explanation Ref Debit Credit Balance Oct-07 Farewell credit card sales Accounts receivable Sales 6980 Oct-12 sale through Master Card Accounts receivable Sales 7780 Oct. 15 Finance charge Accounts receivable Finance Charge 8300 Oct-24 Holt notes recivable dishonoured Accounts receivable Notes receivable 15800 Interest Receivable Date Explanation Ref Debit Credit Balance Sep-30 Balance 101 Oct-24 Holt Notes dishonoured interest receivable Interest earned on notes receivable 163.50 Oct-31 Noblitt Corp. Interest receivable Interest earned on Notes receivable 243.06667 Farewell Compnay, Balance Sheet (Partial) October 31 Current Assets $ $ Accounts receivable 15800 Notes Receivable 13200 Interest receivable 243.06667 Total Current Assets 29243.0667
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