Question
On January 10, Mary Dawes uses her Pierson Co. credit card topurchase merchandise from Pierson Co. for $9,000. On February 10,Dawes is billed for the amount due of $9,000. On February 12, Dawespays $5,000 on the balance due. On March 10, Dawes is billed forthe amount due, including interest at 2% per month on the unpaidbalance as of February 12. Prepare the entries on Pierson Co.'sbooks related to the transactions that occurred on January 10,February 12, and March 10. I know that Debits = Credits, so the answer value will be the samein each box. Thank you!
Explanation / Answer
AccountsReceivables -Dawes $4,260 InterestRevenue $260 AccountsReceivables -Dawes $4,000 Cancelled out the balance bill amount $4,000 ($9,000 - $5,000 cash received) raised on Jan. 10 and fresh invoice raised including interest for 1 month $180 ($9,000 x 2%) + $80 interst for 1 month on balance amount i.e. ($4,000 x 2%)