Question

On January 1, 2020, Novak Corp. had Accounts Receivable $140,800, Notes Receivable $24,000, and Allowance for Doubtful Accounts $12,300. The note receivable is from Willingham Company. It is a 4-month, 9% note dated December 31, 2019. Novak Corp. prepares financial statements annually at December 31. During the year, the following selected transactions occurred.

Jan. 5		Sold $18,200 of merchandise to Sheldon Company, terms n/15.
20		Accepted Sheldon Company’s $18,200, 3-month, 8% note for balance due.
Feb. 18		Sold $6,400 of merchandise to Patwary Company and accepted Patwary’s $6,400, 6-month, 9% note for the amount due.
Apr. 20		Collected Sheldon Company note in full.
30		Received payment in full from Willingham Company on the amount due.
May 25		Accepted Potter Inc.’s $4,400, 3-month, 7% note in settlement of a past-due balance on account.
Aug. 18		Received payment in full from Patwary Company on note due.
25		The Potter Inc. note was dishonored. Potter Inc. is not bankrupt; future payment is anticipated.
Sept. 1		Sold $10,400 of merchandise to Stanbrough Company and accepted a $10,400, 6-month, 10% note for the amount due.

Journalize the above transactions. The company uses straight-line depreciation for buildings and equipment. The buildings are estimated to have a 50-year life and no salvage value. The equipment is estimated to have a 10-year useful life and no salvage value. Update depreciation on assets disposed of at the time of sale or retirement

Answer 1

	Journal Entries
Date	General Journal	Debit	Credit
5-Jan	Accounts Receivable	$18,200
	To Sales Revenue		$18,200
	(Being goods sold to sheldon company)
20-Jan	8% Notes Receivable	$18,200
	To Accounts Receivable		$18,200
	(Being note receivable accepted of Sheldon company)
18-Feb	9% Note Receivable	$6,400
	To Sales Revenue		$6,400
	(Being note receivable accepted of Patwary corporation for goods sold)
20-Apr	Cash	$18,564
	To 8% Notes Receivable		$18,200
	To Interest on Notes Receivable		364
	(18200*8%*3/12)
	(Being payment received against sheldon note receivable)
30-Apr	Cash	$24,720
	To 9% Notes Receivable		$24,000
	To Interest on Notes Receivable		720
	(24000*9%*4/12)
	(Being payment received against Willingham company note receivable)
25-May	7% Note Receivable	$4,400
	To Accounts Receivable		$4,400
	(Being note receivable accepted of Potter Inc)
18-Aug	Cash	$6,688
	To 9% Notes Receivable		$6,400
	To Interest on Notes Receivable		288
	(6400*9%*6/12)
	(Being payment received against Patwary company note receivable)
25-Aug	Accounts Receivable	$4,477
	To 7% Note Receivable		4400
	To Interest revenue on note receivable		77
	(4400*7%*3/12)
	(Being note receivable dishonored by Potter Inc)
1-Sep	10% Note Receivable	$10,400
	To Sales Revenue		$10,400
	(Being note receivable accepted of Stanbrough Company for goods sold)