Problem 8-6A The following selected transactions occurred for Accustart Corporat
ID: 2576521 • Letter: P
Question
Problem 8-6A
The following selected transactions occurred for Accustart Corporation. The company uses a perpetual inventory system, has a May 31 year end, and adjusts its accounts annually.
(a) Record the above transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to the nearest whole dollar, e.g. 5,275.)
Date
Account Titles and Explanation
Debit
Credit
(To record sales)
(To record sales)
(To record sales)
(To record sales)
Feb. 1 Sold merchandise for $8,800 on account (n/30) to Morgan Ltd.. The cost of goods sold was $6,600. 3 Sold $13,200 of merchandise costing $8,900 to Gauthier Company and accepted Gauthier’s two-month, 7% note in payment. Interest is due at maturity. 26 Sold $13,200 of merchandise to Mathias Corp., terms n/30. The cost of the merchandise sold was $7,800. Mar. 6 Sold, on account, $3,800 of merchandise that cost $3,100 to Superior Limited. 27 Accepted a two-month, 7%, $13,200 note from Mathias for the balance due. Interest is due at maturity. (See February 26 transaction.) Apr. 3 Collected the Gauthier note in full. (See February 3 transaction.) May 27 The Mathias note of March 27 was dishonoured. It is expected that Mathias will eventually pay the amount owed. 31 Recorded accrued interest for three months on outstanding interest on the receivable due from Morgan. Interest on unpaid receivables is charged at 24% per annum (2% per month). (See February 1 transaction.)Explanation / Answer
The given transactions will be recorded as follows:
Date Account Titles and Explanation Debit Credit Feb. 1 Accounts receivable 8800 Sales 8800 Cost of goods sold 6600 Merchandise inventory 6600 Feb. 3 Notes receivable 13200 Sales 13200 Cost of goods sold 8900 Merchandise inventory 8900 Feb. 26 Accounts receivable 13200 Sales 13200 Cost of goods sold 7800 Merchandise inventory 7800 Mar. 6 Accounts receivable 3800 Sales 3800 Cost of goods sold 3100 Merchandise inventory 3100 Mar. 27 Notes receivable 13200 Accounts receivable 13200 Apr. 3 Cash (13,200 + 154) 13354 Notes Receivable 13200 Interest Revenue (13,200 x 7% x 2/12) 154 May. 27 Accounts receivable (13,200 + 154) 13354 Notes Receivable 13200 Interest Revenue (13,200 x 7% x 2/12) 154 May. 31 Interest receivable (8800 x 2% x 4) 704 Interest revenue 704