Question 14 [30 points]

The following cases are independent. Case A. On September 1, 2015, Dappa Apparel sold merchandise to a customer, Susan Huang for $390,000, terms 2/10, n/EOM (i.e., end of month). Because of non-payment by Susan Huang, Dappa Apparel received a $390,000, 5%, 12-month note on October 1, 2015. The annual reporting period ends December 31 and Dappa Apparel uses the periodic inventory system. Susan Huang paid the note in full on its maturity date. Record the following transactions, assuming the company uses the gross method to account for accounts and notes receivable.

1. The sale of merchandise on credit.
2. The note received in settlement of the account.
3. The adjusting entry for interest.
4. Collection of the note and interest.

Enter the transaction letter as the description when entering the transactions in the journal. Dates must be entered in the format dd/mmm (i.e., January 15 would be 15/Jan). Please make sure your final answer(s) are accurate to 2 decimal places.

Case B. On April 1, 2015, Cappa Apparel sold merchandise to a customer, Kelly Young and received a $65,000 (face amount), two-year, non-interest-bearing note. The market rate of interest is 5%. The annual reporting period ends November 30 and Cappa Apparel uses the periodic inventory system. Kelly Young paid the note in full on its maturity date. Record the following transactions, assuming the company uses the gross method to account for accounts and notes receivable.

1. The sale of merchandise and acquisition of non-interest-bearing note.
2. The adjusting entry for interest for the first year-end, November 30, 2015.
3. Collection of the note on March 31, 2017. (Hint: this will be after the November 30, 2016 year-end adjusting entry.)

Please make sure your final answer(s) are accurate to the nearest whole number.

Please show your workings for the answer.