Question

Kingbird, Inc. closes its books on its July 31 year-end. The company does not make entries to accrue for interest except at its year-end. On June 30, the Notes Receivable account balance is $ 26,600. Notes Receivable include the following.

Date		Maker		Face Value		Term		Maturity Date		Interest Rate
April 21		Coote Inc.		$ 5,600		90 days		July 20		8%
May 25		Brady Co.		9,000		60 days		July 24		10%
June 30		BMG Corp.		12,000		6 months		December 31		8%

During July, the following transactions were completed.

July 5		Made sales of $ 4,850 on Kingbird, Inc. credit cards.
14		Made sales of $ 800 on Visa credit cards. The credit card service charge is 3%.
20		Received payment in full from Coote Inc. on the amount due.
		24 Received payment in full from Brady Co. on the amount due. Enter the balances at July 1 in the receivable accounts and post the entries to all of the receivable accounts. (Post entries in the order of journal entries posted in the previous part.)

Answer 1

Computation of Interest accrued

Date	Due date	Maker	Amount(in $)	Rate of Interest	Interest Accrued(in $)
April 21	July 20	Coote Inc	5,600	8%	112(5,600*8%*3/12)
May 24	Jully 24	Brady Co.	9,000	10%	150(9,000*10%*2/12)
June 30	Dec 31	BMG corp	12,000	8%	80(12,000*8%*1/12)

Journal entries-

Date	Particulars	Debit(in $)	Credit(in $)
July 5	Accounts Receivables	4,850
	Sales		4,850
	(Being sale made on Kingbird, Inc. credit cards)
July 14	Cash	776
	Service Fee expenses(800*3%)	24
	Sales		800
	(Being sales made on Visa credit cards with a service fee of 3%)
July 20	Cash	5,712
	Note Receiveable		5,600
	Interest revenue		112
	(received the amount from Coote.inc)
July 24	Cash	9,150
	Note Receiveable		9,000
	Interest revenue		150
	(received the amount from Brady Co.)
July 31	Interest Receivable	80
	Interest revenue		80
	(Being interest of BMG corp accrued)

3. Account receivable balances as on July1

Particulars	Amount(in $)
8% Note receivable from Coote Inc.	5,600
10% Note receivable from Brady Co	9,000
8% note receivable froom BMG Corp	12,000
Total receivables	26,600

4. Entries to all receiavbles account-

Account receivable-Coote Inc.

Particulars	Debit	Particulars	Credit
8% Note receivable	5,600	closing bal	5,600
	5,600		5,600

Account receivable- Brady Co.

Particulars	Debit	Particulars	Credit
10% Note receivable	9,000	closing bal	9,000
	9,000		9,000

Account receivable-BMG Corp.

Particulars	Debit	Particulars	Credit
8% Note receivable	12,000	closing bal	12,000
	12,000		12,000