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. 13. Sold merchandise on account to Black Tie Co., $30,300. The cost of goods sold was $18,180.
Mar. 10. Accepted a 60-day, 6% note for $30,300 from Black Tie Co. on account.
May 9. Received from Black Tie Co. the amount due on the note of March 10.
June 10. Sold merchandise on account, terms 2/10, n/30, to Holen for $11,400. Record the sale net of the discount. The cost of goods sold was $6,840.
15. Loaned $24,000 cash to Pioneer Co., receiving a 30-day, 8% note.
20. Received from Holen the amount due on the invoice of June 10, less 2% discount.
July 15. Received the interest due from Pioneer Co. and a new 60-day, 9% note as a renewal of the loan of June 15. (Record both the debit and the credit to the notes receivable account.)
Sept. 13. Received from Pioneer Co. the amount due on its note of July 15.
13. Sold merchandise on account toWycoff Co., $60,000. The cost of goods sold was $36,000.
Oct. 12. Accepted a 60-day, 6% note for $60,000 from Wycoff Co. on account.
Dec. 11. Wycoff Co. dishonored the note dated October 12.
26. 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. Assume this is a year in which February has 28 days.

Jan. 13-sale Accounts Receivable-Black Tie Co.
Sales
Jan. 13-cost Cost of Goods Sold
Inventory
Mar. 10 Notes Receivable
Accounts Receivable-Black Tie Co.
May 9 Cash
Notes Receivable
Interest Revenue
June 10-sale Accounts Receivable-Holen
Sales
June 10-cost Cost of Goods Sold
Inventory
June 15 Notes Receivable
Cash
June 20 Cash
Accounts Receivable-Holen
July 15 Notes Receivable
Cash
Notes Receivable
Interest Revenue
Sept. 13- note Cash
Notes Receivable
Interest Revenue
Sept. 13-sale Accounts Receivable-Wycoff Co.
Sales
Sept. 13-cost Cost of Goods Sold
Inventory
Oct. 12 Notes Receivable
Accounts Receivable-Wycoff Co.
Dec. 11 Accounts Receivable-Wycoff Co.
Notes Receivable
Interest Revenue
Dec. 26 Cash
Accounts Receivable-Wycoff Co.
Incorrect
Interest Revenue

Feedback

The due date is the date the note is to be paid.

Remember the interest rate is stated on an annual basis, while the term is expressed as days. Assume a 360 day year. The maturity value is the amount that must be paid at the due date of the note.

At the due date, the company records the receipt of payment on the note.

Learning Objective 6.

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Answer 1