close solutoin list

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., $28,000. The cost of merchandise sold was $16,800. Mar. 18. Accepted a 60-day, 6% note for $28,000 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 $17,700. The cost of merchandise sold was $10,600. 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 30-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 45 days at 8% computed on the maturity value of the note. Instructions Journalize the entries to record the transactions.

BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094
BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

Solutions

Chapter
Section
Chapter 9, Problem 9.6BPR
Textbook Problem

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., $28,000. The cost of merchandise sold was $16,800.
Mar. 18. Accepted a 60-day, 6% note for $28,000 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 $17,700. The cost of merchandise sold was $10,600.
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 30-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 45 days at 8% computed on the maturity value of the note.

Instructions

Journalize the entries to record the transactions.

Expert Solution
To determine

Note receivable:

Note receivable refers to a written promise received by the creditor from the debtor in formal, for the amounts to be settled within a stipulated period of time. This written promise is issued by a debtor or borrower to the lender or creditor. Notes receivable is an asset of a business. Notes receivable often used for the credit periods of more than 60 days.

Accounts receivable:

Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.

Interest on note:

Interest on note is the amount charged on the principal value of note for the privilege of borrowing money. Interest is to be paid by the borrower and to be received by the lender.

To journalize: The entries to record the transactions.

Explanation of Solution

Journalize the entries to record the transactions.

Date Account Title and Explanation Debit ($) Credit ($)
January 21 Accounts receivable – Company B 28,000  
      Sales   28,000
  (To record the sales made on account)    
 
January 21 Cost of merchandise sold 16,800  
      Merchandise inventory   16,800
  (To record the cost of merchandise sold)    
 
March 18 Notes receivable 28,000  
      Accounts receivable – Company B   28,000
  (To record the receipt of note on account)    
 
May 17 Cash $28,280  
      Notes receivable   $28,000
      Interest revenue (1)   $280
  (To record the collection of cash on note of march 18)    
 
June 15 Accounts receivable – Company P 17,700  
      Sales   17,700
  (To record the sales made on account)    
       
June 15 Cost of merchandise sold 10,600  
      Merchandise inventory   10,600
  (To record the cost of merchandise sold)    
 
June 21 Notes receivable 18,000  
      Cash   18,000
  (To record the loaned amount on note)    
 
June 25 Cash 17,700  
      Accounts receivable – Company P   17,700
  (To record the collection of cash on account)    
 
July 21 Notes receivable 18,000  
  Cash 120  
      Notes receivable   18,000
      Interest revenue (2)   120
  (To record the amount of interest received and renewal of the loan of June 21 )    
 
September 19 Cash 18,270  
    Notes receivable   18,000
      Interest revenue (3)   270
  (To record the collection of cash on note of July 21)    
 
September 22 Accounts receivable – Company W 20,000  
    Sales   20,000
  (To record the sales made on account)    
 
September 22 Cost of merchandise sold 12,000  
    Merchandise inventory   12,000
  (To record the cost of merchandise sold)    
 
October 14 Notes receivable 20,000  
      Accounts receivable – Company W   20,000
  (To record the receipt of note on account)    
 
November 13 Accounts receivable – Company W $20,100  
      Notes receivable   $20,000
      Interest revenue (4)   $100
  (To record dishonored note dated October 14)    
 
December 28 Cash $20,301  
      Accounts receivable – Company W   $20,100
      Interest revenue (5)   $201
  (To record collection of cash from the dishonored note from Company W)    

Working note:

For May 17:

Calculate the amount of interest revenue.

Interestrevenue=[Face amount ×Annual interest rate×Time in terms of year]=[$28,000×6%100×60 days360 days]=$280 (1)

For July 21:

Calculate the amount of interest revenue

Want to see this answer and more?

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

See solution

Chapter 9 Solutions

Accounting
Show all chapter solutions
Ch. 9 - Direct write-off method Journalize the following...Ch. 9 - Direct write-off method Journalize the following...Ch. 9 - Allowance method Journalize the following...Ch. 9 - Allowance method Journalize the following...Ch. 9 - Percent of sales method At the end of the current...Ch. 9 - Percent of sales method At the end of the current...Ch. 9 - Analysis of receivables method At the end of the...Ch. 9 - Analysis of receivables method At the end of the...Ch. 9 - Note receivable Lundquist Company received a...Ch. 9 - Note receivable Prefix Supply Company received a...Ch. 9 - Accounts receivable turnover and days sales in...Ch. 9 - Accounts receivable turnover and days sales in...Ch. 9 - Classifications of receivables Boeing is one of...Ch. 9 - Nature of uncollectible accounts MGM Resorts...Ch. 9 - Entries for uncollectible accounts, using direct...Ch. 9 - Entries for uncollectible receivables, using...Ch. 9 - Entries to write off accounts receivable Quantum...Ch. 9 - Providing for doubtful accounts At the end of the...Ch. 9 - Number of days past due Toot Auto Supply...Ch. 9 - Aging of receivables schedule The accounts...Ch. 9 - Estimating allowance for doubtful accounts...Ch. 9 - Adjustment for uncollectible account Using data in...Ch. 9 - Estimating doubtful accounts Performance Bike Co....Ch. 9 - Entry for uncollectible accounts Using the data in...Ch. 9 - Entries for bad debt expense under the direct...Ch. 9 - Entries for bad debt expense under the direct...Ch. 9 - Effect of doubtful accounts on net income During...Ch. 9 - Effect of doubtful accounts on net income Using...Ch. 9 - Entries for bad debt expense under the direct...Ch. 9 - Entries for bad debt expense under the direct...Ch. 9 - Determine due date and interest on notes Determine...Ch. 9 - Entries for notes receivable Spring Designs ...Ch. 9 - Entries for notes receivable The series of five...Ch. 9 - Entries for notes receivable, including year-end...Ch. 9 - Entries for receipt and dishonor of note...Ch. 9 - Entries for receipt and dishonor of notes...Ch. 9 - Receivables on the balance sheet List any errors...Ch. 9 - Accounts receivable turnover and days sales in...Ch. 9 - Accounts receivable turnover and days sales in...Ch. 9 - Accounts receivable turnover and days sales in...Ch. 9 - Accounts receivable turnover Use the data in...Ch. 9 - Entries related to uncollectible accounts The...Ch. 9 - Aging of receivables; estimating allowance for...Ch. 9 - Compare two methods of accounting for...Ch. 9 - Details of notes receivable and related entries...Ch. 9 - Notes receivable entries The following data relate...Ch. 9 - Sales and notes receivable transactions The...Ch. 9 - Entries related to uncollectible accounts The...Ch. 9 - Aging of receivables; estimating allowance for...Ch. 9 - Compare two methods of accounting for...Ch. 9 - Details of notes receivable and related entries...Ch. 9 - Notes receivable entries The following data relate...Ch. 9 - Sales and notes receivable transactions The...Ch. 9 - Ethics in Action Bud Lighting Co. is a retailer of...Ch. 9 - Ethics in Action Bev Wynn, vice p resident of...Ch. 9 - Communication On January 1, Xtreme Co. began...Ch. 9 - Estimate uncollectible accounts For several years,...Ch. 9 - Accounts receivable turnover and days sales in...Ch. 9 - Accounts receivable turnover and days sales in...Ch. 9 - Accounts receivable turnover and days sales in...

Additional Business Textbook Solutions

Find more solutions based on key concepts
Show solutions
When is a stock said to be in equilibrium? Why might a stock at any point in time not be in equilibrium?

Fundamentals of Financial Management, Concise Edition (MindTap Course List)

How is organization height related to the span of management?

Foundations of Business (MindTap Course List)

Define the price elasticity of demand and the income elasticity of demand.

Principles of Macroeconomics (MindTap Course List)

Why is productivity important?

Principles of Economics (MindTap Course List)

What is meant by controlling?

Managerial Accounting: The Cornerstone of Business Decision-Making

Describe Enterprise Risk Management (ERM).

Pkg Acc Infor Systems MS VISIO CD

EXCESS CAPACITY Krogh Lumbers 2014 financial statements are shown here. Krogh Lumber: Balance Sheet as of Decem...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)