Question

Jan. 3 Loaned $21,600 cash to Trina Gelhaus, receiving a 90-day, 7% note. Feb. 10 Sold merchandise on account to Bradford & Co., $26,400. The cost of the goods sold was $15,840. 13 Sold merchandise on account to Dry Creek Co., $63,600. The cost of goods sold was $57,240. Mar. 12 Accepted a 60-day, 8% note for $26,400 from Bradford & Co. on account. 14 Accepted a 60-day, 9% note for $63,600 from Dry Creek Co. on account. Apr. 3 Received the interest due from Trina Gelhaus and a new 120-day, 9% note as a renewal of the loan of January 3. (Record both the debit and the credit to the notes receivable account.) May 11 Received from Bradford & Co. the amount due on the note of March 12. 13 Dry Creek Co. dishonored its note dated March 14. July 12 Received from Dry Creek Co. the amount owed on the dishonored note, plus interest for 60 days at 12% computed on the maturity value of the note. Aug. 1 Received from Trina Gelhaus the amount due on her note of April 3. Oct. 5 Sold merchandise on account, terms 2/10, n/30, to Halloran Co., $12,500. Record the sale net of the 2% discount. The cost of the goods sold was $7,500. 15 Received from Halloran Co. the amount of the invoice of October 5, less 2% discount.

Answer 1

January:-

3/1

Trina Loan a/c Dr $21600

to cash a/c $21600

(@7% for 90days)

February:-

10/2

1.Bradford & co a/c Dr $26400

to sales a/c $26400

2.

sales a/c Dr $26400

to cost of goods sold a/c $15840

to trading a/c (profit) $10560

13/2

1.Drycreek & co a/c Dr $63600

to sales a/c $63600

2.

sales a/c Dr $63600

to cost of goods sold a/c $57240

to trading a/c (profit) $6360

march:-

12/3

Bills receivable a/c Dr $26400

to Bradford a/c $26400

(@8% for 60days)

14/3

Bills receivable a/c Dr $63600

to Drycreek & co a/c $63600

(@9% for 60days)

April:-

3/4

1.interest a/c Dr $378 (21600*7%*90/360)

to cash a/c $378

2.old entry should be cancelled since it is renewed.

cash a/c Dr $21600

to trina a/c $21600

(@7% for 90days)

new entry.

Trina a/c Dr $21600

to cash a/c $21600

(@9% for 120days)

may:-

11/5

cash a/c Dr $26752

to interest a/c $352 (26400*60/360*8%)

to Brandford & co a/c $26400

2. interest a/c Dr $352

to P/L a/c $352

JULY:-

12/7

cash a/c Dr $67136

to interest a/c $3536 (63600*60/360*9%) = 954

[954+63600]*12%*120/360 = 2582

to Brandford & co a/c $63600

2. interest a/c Dr $3136

to P/L a/c $3136

AUGUST

1/8

cash a/c Dr $22248

to interest a/c $648

to trina a/c $21600

OCTOBER
5/10

1.halloran & co a/c Dr $12250

trade discount a/c Dr $250 (2% on 12500)

to sales a/c $12500

2.

sales a/c Dr $12500

to cost of goods sold a/c $7500

to trading a/c (profit) $5000

3. P/L a/c Dr $250

to trade discount a/c $250

15/10

interest a/c Dr $6.81

to P/L a/c $6.81

cash a/c Dr $12256.81

to interest a/c $6.81

to halloran and co a/c $12250

total sales = 102500

less

cost = (80580)

trade profit = 21920

total interest = 4920.81

total income = 26840.81$