Sales and Notes Receivable Transactions The following were selected from among t

Question

Sales and Notes Receivable Transactions

The following were selected from among the transactions completed during the current year by Danix Co., an appliance wholesale company:

Jan. 21. Sold merchandise on account to Black Tie Co., $28,000. The cost of goods sold was $16,800.
Mar. 18. Accepted a 60-day, 6% note for $28,000 from Black Tie Co. on account.
May 17. Received from Black Tie Co. the amount due on the note of March 18.
June 15. Sold merchandise on account, terms 1/10, n/30, to Pioneer Co. for $17,700. Record the sale net of the discount. The cost of goods sold was $10,600.
21. Loaned $18,000 cash to JR Stutts, receiving a 30-day, 8% note.
25. Received from Pioneer Co. the amount due on the invoice of June 15, less 1% discount.
July 21. Received the interest due from JR Stutts and a new 60-day, 9% note as a renewal of the loan of June 21. (Record both the debit and the credit to the notes receivable account.)
Sept. 19. Received from JR Stutts the amount due on her note of July 21.
22. Sold merchandise on account to Wycoff Co., $20,000. The cost of goods sold was $12,000.
Oct. 14. Accepted a 30-day, 6% note for $20,000 from Wycoff Co. on account.
Nov. 13. Wycoff Co. dishonored the note dated October 14.
Dec. 28. Received from Wycoff Co. the amount owed on the dishonored note, plus interest for 45 days at 8% computed on the maturity value of the note.

Required:

Journalize the entries to record the transactions. Assume 360 days in a year. For a compound entry, if an amount box does not require an entry, leave it blank. Assume this is a year in which February has 28 days.

Jan. 21-sale

Jan. 21-cost

Mar. 18

May 17


June 15-sale

June 15-cost

June 21

June 25

July 21



Sept. 19- note


Sept. 22-sale

Sept. 22-cost

Oct. 14

Nov. 13


Dec. 28

Explanation / Answer

SOLUTION:

Date Particular Debit Credit Jan 21 Account Receivable- Black Tie Co 28,000 Sales 28,000 Cost of Merchandise Sold 16,800 Merchandise Inventory 16,800 Mar 18 Note Receivable- Black Tie Co 28,000 Account Receivable- Black Tie Co 28,000 May 17 Cash 28,280 Interest Revenue 280 Note Receivable - Black Tie Co 28,000 ($28,000 * 6% * 60/360) June 15 Account Receivable- Pioneer Co. 17,700 Sales 17,700 Cost of Merchandise Sold 10,600 Merchandise Inventory 10,600 June 21 Note Receivable - JR Stutts 18,000 Cash 18,000 June 25 Cash 17,523 Sales discount 177 Account Receivable- Pioneer Co. 17,700 July 21 Note Receivable - JR Stutts 18,000 Cash 120 Interest Revenue 120 Note Receivable - JR Stutts 18,000 ($18,000 * 8% * 30/360). Sept 19 Cash 18,000 Interest Revenue 270 Note Receivable - JR Stutts 18,270 ($18,000 * 9% * 60/360) Sept 22 Account Receivable- Wycoff Co 20,000 Sales 20,000 Cost of Merchandise Sold 12,000 Merchandise Inventory 12,000 Oct 14 Note Receivable- Wycoff Co 20,000 Account Receivable- Wycoff Co 20,000 Nov 13 Account Receivable- Wycoff Co 20,100 Interest Revenue 100 Note Receivable - Wycoff Co 20,000 ($20,000 * 6% * 30/360) Dec 28 Cash 20,301 Interest Revenue 201 Account Receivable- Wycoff Co 20,100 ($20,100 * 8% * 45/360)

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