Question
P9-6A Prepare entries for various notes receivable transactions . (LO 1, 2, 3, 4) Farwell Company closes its books monthly. On September 30, selected ledger
P9-6A
Prepare entries for various notes receivable transactions.
(LO 1, 2, 3, 4)
Farwell Company closes its books monthly. On September 30, selected ledger account balances are:
Notes Receivable | $37,000 |
Interest Receivable | 183 |
Notes Receivable include the following.
Date | Maker | Face | Term | Interest |
---|---|---|---|---|
Aug.16 | K. Goza Inc. | $12,000 | 60 days | 8% |
Aug.25 | Holt Co. | 9,000 | 60 days | 7% |
Sept. 30 | Noblitt Corp. | 16,000 | 6 months | 9% |
Interest is computed using a 360-day year. During October, the following transactions were completed.
Oct. 7 | Made sales of $6,900 on Farwell credit cards. |
12 | Made sales of $900 on MasterCard credit cards. The credit card service charge is 3%. |
15 | Added $460 to Farwell customer balances for finance charges on unpaid balances. |
15 | Received payment in full from K. Goza Inc. on the amount due. |
24 | Received notice that the Holt note has been dishonored. (Assume that Holt is expected to pay in the future.) |
Instructions
(a)
Journalize the October transactions and the October 31 adjusting entry for accrued interest receivable.
(b)
Enter the balances at October 1 in the receivable accounts. Post the entries to all of the receivable accounts. There was no opening balance in accounts receivable.
Accounts receivable $16,465
(c)
Show the balance sheet presentation of the receivable accounts at October 31.
Total receivables $32,585
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