One of Natalie's friends, Curtis Lesperance, runs a coffee shop where he sells specialty coffees and prepares and sells muffins and cookies. He is eager to buy one of Natalie's fine European mixers, which would enable him to make larger batches of muffins and cookies. However, Curtis cannot afford to pay for the mixer for at least 30 days. He asks Natalie if she would be willing to sell him the mixer on credit. The following transactions occurred in June through August. June 1 After much thought, Natalie sells a mixer to Curtis on credit, terms n/30, for $1,100 (cost of mixer $600). 2 30 30 30 July 15 30 Natalie meets with the bank manager and arranges to get access to a credit card account. The terms of credit card transactions are 3% of the sales transactions and a monthly equipment rental charge of $75. Natalie teaches 13 classes in June. Seven classes were paid for in cash, $1,050, the other six classes were paid for by credit card, $900 Natalie receives and reconciles her bank statement. She makes sure that the bank has correctly processed the monthly $75 charge for the rental of the credit card equipment and the 3% fee on the credit card transactions. Curtis calls Natalie. He is unable to pay the amount outstanding for another month, so he signs a one-month, 6% note receivable. Natalie sells a mixer to a friend of Curtis. The friend pays $1,100 for the mixer by credit card (cost of mixer $600). Natalie teaches 16 classes in July. Eight classes are paid for in cash, $1,200; eight classes are paid for by credit card, $1,200. 31 31 Aug. 10 31 Natalie reconciles her bank statement and makes sure the bank has recorded the correct amounts for the rental of the credit card equipment and the credit card sales. Curtis calls Natalie. He cannot pay today but hopes to have a check for her at the end of the week. Natalie accrues July interest. Curtis calls again and Natalie agrees to extend the note to two months. Curtis will repay the note on August 31. including interest for 2 months. Natalie receives a check from Curtis in payment of his balance plus interest outstanding (b) Prepare journal entries for the transactions that occurred in June, July, and August. The company uses a perpetual inventory system. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to 2 decimal places, e.g. 25.20. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation June 1 Accounts Receivable Sales Revenue (To record sales on account) Debit 1.100 Credit SU 1.100 Aug. 10 Curtis calls again and Natalie agrees to extend the note to two months. Curtis will repay the note on August 31, including interest for 2 months. 31 Natalie receives a check from Curtis in payment of his balance plus interest outstanding. (b) Prepare journal entries for the transactions that occurred in June, July, and August. The company uses a perpetual inventory system. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to 2 decimal places, e.g. 25.20. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation June 1 Accounts Receivable Sales Revenue (To record sales on account) June 1 Cost of Goods Sold Inventory (To record cost of good sold) Debit 1.100 600 Credit 1,100 600 June 1 Accounts Receivable June 1 Sales Revenue (To record sales on account) Cost of Goods Sold June 2 Inventory (To record cost of good sold) No Entry No Entry June 30 Cash Other Receivables Service Revenue (To record services provided to customers) 1,100 600 1,050 900 1.950 1,100 600 0 June 30 (To record services provided to customers) Other Operating Expenses Cash (To record service charge expense) June 30: Notes Receivable Accounts Receivable (To record acceptance of Curtis company note) July 15: Other Receivables Sales Revenue Cost of Goods Sold July 30: Cash Service Revenue 75 1.100 1.100 600 1.200 1.100 1,100 2,400 75 July 15 Other Receivables Sales Revenue July 30 Cost of Goods Sold Cash July 31 # Service Revenue Cash credit card fee Other Receivables July 31 Interest Receivable Interest Revenue (To record service charge expense) 1,100 600 1,200 2.231 69 5.50 1,100 2,400 2.300 5.50 July 31 (To record service charge expense) Accounts Receivable Aug 10 Notes Receivable (To accrue interest on Curtis note) No Entry Aug 31 4 No Entry Cash Interest Receivable Interest Revenue Accounts Receivable: 1,100 1.111 1,100 5.50 5.50 1.100