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., $41,700. The cost of merchandise sold was $25,020.
Mar. 18.		Accepted a 60-day, 9% note for $41,700 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 to Pioneer Co. for $16,200. The cost of merchandise sold was $9,720.
21.		Loaned $24,000 cash to JR Stutts, receiving a 30-day, 6% note.
25.		Received from Pioneer Co. the amount due on the invoice of June 15.
July 21.		Received the interest due from JR Stutts and a new 60-day, 8% 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 merchandise sold was $12,000.
Oct. 14.		Accepted a 60-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 15 days at 12% 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.

Answer 1

Journal Entries:

Date	Account title and explanation	Debit	Credit
Jan 21	Accounts receivable-Black Tie co.	$41,700
	Sales revenue		$41,700
	[To record credit sales]
	Cost of goods sold	$25,020
	Inventory		$25,020
	[To record cost of goods sold]
Mar 18	Notes receivable-Black Tie Co.	$41,700
	Accounts receivable-Black Tie co.		$41,700
	[To record acceptance of notes]
May 17	Cash	$42,325.50
	Notes receivable-Black Tie Co.		$41,700
	Interest revenue [$41,700 x 9% x (60/360)]		$625.50
	[To record cash collected for ntoes at maturity]
June 15	Accounts receivable-Pioneer Co.	$16,200
	Sales revenue		$16,200
	[To record credit sales]
	Cost of goods sold	$9,720
	Inventory		$9,720
	[To record cost of goods sold]
June 21	Notes receivable-JR Stutts	$24,000
	Cash		$24,000
	[To record loaned cash in exchange of notes]
June 25	Cash	$16,200
	Accounts receivable-Pioneer Co.		$16,200
	[To record collections from customers]
July 21	Cash	$120
	Notes recivable-JR Stutts	$24,000
	Interest revenue [$24,000 x 6% x (30/360)]		$120
	Notes recivable-JR Stutt		$24,000
	[To record interest received and renewal of notes]
Sept. 19	Cash	$24,320
	Notes recivable-JR Stutt		$24,000
	Interest revenue [$24,000 x 8% x (60/360)]		$320
	[To record cash received for notes at maturity]
Sept. 22	Accounts receivable-Wycoff Co.	$20,000
	Sales revenue		20000
	[To record credit sales]
	Cost of goods sold	12000
	Inventory		12000
	[To record cost of goods sold]
Oct.14	Notes receivable-Wycoff Co.	$20,000
	Accounts receivable-Wycoff Co.		20000
	[To record acceptence of notes]
Nov. 13	Accounts receivable-Wycoff Co.	$20,200
	Notes receivable-Wycoff Co.		$20,000
	Interest revenue [$20,000 x 6% x (60/360)]		$200
	[To record dishonor of notes]
Dec 28	Cash	$20,301
	Accounts receivable-Wycoff Co.		$20,200
	Interest revenue [$20,200 x 12% x (15/360)]		$101
	[To record collections from customers]