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

SOLUTION

Date	Accounts titles and Explanation	Debit ($)	Credit ($)
Jan.21	Accounts receivabe- Black tie co.	39,900
	Sales		39,900
	Cost of merchandise sold	23,940
	Merchandise inventory		23,940
Mar.18	Notes receivable	39,900
	Accounts receivabe- Black tie co.		39,900
May 17	Cash	40,432
	Notes receivable		39,900
	Interest revenue (39,900*8%*60/360)		532
June 15	Accounts receivable-Pioneer Co.	15,600
	Sales		15,600
	Cost of merchandise sold	9,360
	Merchandise inventory		9,360
June 21	Notes recievable	18,000
	Cash		18,000
June 25	Cash	15,600
	Accounts receivable-Pioneer Co.		15,600
July 21	Notes receivable	18,000
	Cash	90
	Notes receivable		18,000
	Interest revenue (18,000*6%*30/360)		90
Sept.19	Cash	18,270
	Notes receivable		18,000
	Interest revenue (18,000*9%*60/360)		270
Sept.22	Accounts receivable-Wycoff Co.	60,000
	Sales		60,000
	Cost of merchandise sold	36,000
	Merchandise inventory		36,000
Oct.14	Notes receivable	60,000
	Accounts receivable-Wycoff Co.		60,000
Nov.13	Accounts receivable-Wycoff Co.	60,600
	Notes receivable		60,000
	Interest revenue (60,000*6%*60/360)		600
Dec.28	Cash	60,903
	Accounts receivable-Wycoff Co.		60,600
	Interest revenue (60,600*12%*15/360)		303