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.
Answer:
Jan. 21 Accounts Receivable—Black Tie Co. 28,000
Sales28,000
21 Cost of Merchandise Sold 16,800
Merchandise Inventory16,800
Mar. 18 Notes Receivable28,000
Accounts Receivable—Black Tie Co. 28,000
May 17 Cash28,280
Notes Receivable28,000
Interest Revenue280
($28,000 × 6% × 60 ÷ 360).
June 15 Accounts Receivable—Pioneer Co. 17,700
Sales17,700
15 Cost of Merchandise Sold 10,600
Merchandise Inventory10,600
21 Notes Receivable18,000
Cash18,000
25 Cash17,700
Accounts Receivable—Pioneer Co. 17,700
July 21 Notes Receivable18,000
Cash120
Notes Receivable18,000
Interest Revenue120
($18,000 × 8% × 30 ÷ 360).
Sept. 19 Cash18,270
Notes Receivable18,000
Interest Revenue270
($18,000 × 9% × 60 ÷ 360).
22 Accounts Receivable—Wycoff Co. 20,000
Sales20,000
Sept. 22 Cost of Merchandise Sold 12,000
Merchandise Inventory12,000
Oct. 14 Notes Receivable20,000
Accounts Receivable—Wycoff Co. 20,000
Nov. 13 Accounts Receivable—Wycoff Co. 20,100
Notes Receivable20,000
Interest Revenue100
($20,000 × 6% × 30 ÷ 360).
Dec. 28 Cash20,301
Accounts Receivable—Wycoff Co. 20,100
Interest Revenue201
($20,100 × 8% × 45 ÷ 360).