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., $39,900. The cost of merchandise sold was $23,940.
Mar. 18.		Accepted a 60-day, 8% note for $39,900 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 $15,600. The cost of merchandise sold was $9,360.
21.		Loaned $18,000 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, 9% 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., $60,000. The cost of merchandise sold was $36,000.
Oct. 14.		Accepted a 60-day, 6% note for $60,000 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.

Jan. 21-sale
Jan. 21-cost
Mar. 18
May 17
June 15-sale
June 15-cost
June 21
June 25
July 21
Sept. 19- note
Sept. 22-sale
Sept. 22-cost
Oct. 14
Nov. 13
Dec. 28

Answer 1

Date	Accounting titles & Explanations				Debit	Credit
21-Jan	Accounts receivable-Black tie co				39,900
	sales					39,900
	cost of goods sold				23,940
	Merchandise inventory					23,940
18-Mar	Note receivable				39,900
	Accounts receivable-Black tie co					39,900
17-May	Cash				40,432
	interest revenue (39900*8%*60/360)					532
	Note Receivable					39,900
15-Jun	Accounts receivable-pioneer				15,600
	Sales					15,600
	cost of goods sold				9,360
	merchandises inventory					9,360
21-Jun	Note receivable -JR Stutts				18,000
	cash					18,000
25-Jun	Cash				15,600
	Accounts receivable -pioneer					15,600
jlu 21	9% note receivable				18,000
	cash				90
	interest revenue		(18000*6%*30/360)			90
	6% note receivable					18,000
19-Sep	cash				18,270
	interest revenue		(18000*9%*60/360)			270
	8% note receivable					18,000
22-Sep	Accounts receivable-wycoff				60,000
	sales					60,000
	cost of goods sold				36,000
	Merchandise inventory					36,000
14-Oct	Note receivable				60,000
	accounts receivable -wycoff					60,000
11-Dec	Account receivable				60,600
	interest revenue					600
	note receivable(60000*6%*60/360)					60,000
26-Dec	Cash				60,903
	interest revenue		(60600*12%*15/360)			303
	Account receivable					60,600