Prepare entries for various notes receivable transactions . (LO 1, 2, 3, 4) Farw
ID: 2489318 • Letter: P
Question
Prepare entries for various notes receivable transactions.
(LO 1, 2, 3, 4)
Farwell Company closes its books monthly. On September 30, selected ledger account balances are:
Notes Receivable include the following.
Interest is computed using a 360-day year. During October, the following transactions were completed.
Instructions
(a)
Journalize the October transactions and the October 31 adjusting entry for accrued interest receivable.
(b)
Enter the balances at October 1 in the receivable accounts. Post the entries to all of the receivable accounts. There was no opening balance in accounts receivable.
Accounts receivable $16,465
(c)
Show the balance sheet presentation of the receivable accounts at October 31.
Total receivables $32,585
Notes Receivable $37,000 Interest Receivable 183Explanation / Answer
Date Accounts Title Dr Cr 7-Oct Accounts Receivable 6900 Sales 6900 (being sales made on credit card) 12-Oct Cash 873 Service Charge expense (900*3%) 27 Sales 900 15-Oct Accounts Receivable 460 Interest Revenue 460 15-Oct Cash 12160 Notes Receivable 12000 Interest Receivable (12000*8%*45/360) 120 Interest Revenue (12000*8%*15/360) 40 (Being amount recived which includes principal and interest amt) 24-Oct Accounts Receivable 9105 Notes Receivable 9000 Interest Receivable (9000*7%*36/360) 63 Interest Revenue (9000*7%*24/360) 42 31-Oct Interest Revenue 120 Interest Receivable (16000*9%*1/12) 120 ans b Balance of accounts Receivable accounts Accounts Receivable (6900+460+9105) 16465 Ans c Balance of Receivable accounts Accounts Receivable (6900+460+9105) 16465 Notes Receivable 16000 Interest receivable 120 Total 32585