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., $31,800. The cost of merchandise sold was $19,080.

Mar. 18. Accepted a 60-day, 6% note for $31,800 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 $17,100. The cost of merchandise sold was $10,260.

21. Loaned $18,000 cash to JR Stutts, receiving a 30-day, 8% 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., $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 in the books of Danix Co

Date	Journal Entries	Debit	Credit
Jan-21	Accounts Receivable A/c - Black Tie Co	$31,800
	Sales A/c		$31,800
	[To record sale of goods on credit to Black Tie Co.]
	Cost of Goods sold A/c	$19,080
	Inventory A/c		$19,080
	[To expense the cost of Goods sold]
Mar-18	Notes Receivable A/c	$31,800
	Accounts Receivable A/c - Black Tie Co		$31,800
	[To record Notes receivable from Black Tie co]
May-17	Cash A/c	$32,118
	Interest Revenue A/c ($31,800 * 6% * (60 / 360)		$318
	Notes Receivable A/c		$31,800
	[To record notes receivable received with interest from Black tie co]
Jun-15	Accounts Receivable A/c - Pioneer Co	$17,100
	Sales A/c		$17,100
	[To record sale of goods on credit to Pioneer Co.]
	Cost of Goods sold A/c	$10,260
	Inventory A/c		$10,260
	[To expense the cost of Goods sold]
Jun-21	Notes Receivable A/c	$18,000
	Cash A/c		$18,000
	[To record Notes receivable from JR Stutts]
Jun-25	Cash A/c	$17,100
	Notes Receivable A/c		$17,100
	{to record Notes received from Pioneer Co]
Jul-21	Notes Receivable A/c	$18,000
	Cash A/c	$120
	INterest Revenue A/c ($18,000 * 8% * (30 / 360)		$120
	Notes Receivable A/c		$18,000
	[To record Interest revenue received and Notes reneived of JR stutts]
Sep-19	Cash A/c	$18,270
	Interest Revenue A/c ($18,000 * 9% * (60/ 360)		$270
	Notes Receivable A/c		$18,000
	[To record Interest revenue  and Notes received from JR stutts]
Sep-22	Accounts Receivable A/c - Wycoff Co	$20,000
	Sales A/c		$20,000
	[To record sale of goods on credit to Wycoff Co.]
	Cost of Goods sold A/c	$12,000
	Inventory A/c		$12,000
	[To expense the cost of Goods sold]
Oct-14	Notes Receivable A/c	$20,000
	Accounts Receivable A/c - Wycoff Co		$20,000
	[To record Notes receivable from Wycoff co]
Nov-12	Accounts Receivable A/c - Wycoff Co	$20,200
	Interest Revenue A/c ($20,000 * 6% * (60/ 360)		$200
	Notes Receivable A/c		$20,200
	[To record the dishonour of notes receivable by Wycoff co]
Dec-28	Cash A/c	$20,267
	Interest Revenue A/c ($20,000 * 8% * (15 / 360)		$67
	Accounts Receivable A/c - Wycoff Co		$20,200
	{to record Account received from wycoff with interest]