Milton Company’s year end is July 31. Milton prepares adjusting entries to accrue interest revenue annually. On June 30, the Notes Receivable account balance is $23,800 and the Credit Card Receivables account balance was zero. Notes receivable are as follows:

Instructions
a. Prepare journal entries for the July transactions and the July 31 adjusting entry for accrued interest revenue. (omit cost of goods sold entries.)
b. Prepare T accounts for Notes Receivable and Credit Card Receivables and enter the balances at July 1. Post the entries prepared in part (a).
c. Show the balance sheet presentation of the receivable accounts at July 31, 2024.

Taking It Further

The sales manager at Milton is confused about why some customer transactions are recorded as Accounts Receivable, some are recorded as Credit Card Receivables, and yet others are recorded as Notes Receivable. Explain the difference in the nature and accounting for each of these receivable accounts to the sales manager.

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Maker Coote Inc. Brady Co. BMG Corp. During July, the following transactions were completed: Date April 21 May 25 June 30 Face Value $ 6,000 7,800 10,000 Term 3 months 2 months 6 months Maturity Date July 20 July 24 December 31 Interest Rate 8% 10% 6% July 5 Made sales of $4,500 on Milton credit cards. 14 20 Made sales of $600 on Visa credit cards. The credit card service charge is 3%. Received payment in full from Coote Inc. on the amount due. 24 Received payment in full from Brady Co. on the amount due.