P8-8B Durhan Company closes its books on its October 31 year-end. The company does not make entries to accrue for interest except at its year-end. On September 30, the Notes Receivable account balance is $22,800. Notes Receivable include the following.

Date Maker Face Value Term Maturity Date Interest Rate

Aug. 16 Stuhmer Inc. $10,000 60 days Oct. 15 6%

Aug. 25 Moberg Co. 3,000 2 months Oct. 25 7%

Sept. 30 Earnest Corp. 9,800 6 months Mar. 30 6%

Interest is computed using a 360-day year. During October, the following transactions were completed.

Oct. 7 Made sales of $4,600 on Durhan credit cards.

12 Made sales of $600 on Visa credit cards. The credit card service charge is 3%.

15 Received payment in full from Stuhmer Inc. on the amount due.

25 Received payment in full from Moberg Co. on amount due.

Instructions

(a) Journalize the October transactions and the October 31 adjusting entry for accrued interest receivable. (Interest is computed using 360 days; omit cost of goods sold entries.)

(b) Enter the balances at October 1 in the receivable accounts and post the entries to all of the receivable accounts. (Use T-accounts.)