View Policies Current Attempt in Progress Schneider Company has a May 31 fiscal year end and adjusts accounts annually. Selected transactions in the year included the following: Jan. 2 Feb. 1 Sold $24,600 of merchandise to Sapounas Company, terms n/30. The cost of the goods sold was $14,760. Schneider uses the perpetual inventory system. Accepted a $24,600, five-month, 5% promissory note from Sapounas Company for the balance due. (See January 2 transaction.) Interest is payable at maturity. Sold $13,200 of merchandise costing $7,920 to Garrison Company and accepted Garrison's three-month, 5% note in payment. Interest is payable at maturity. 15 Sold $10,600 of merchandise to Hoffman Co., terms n/30. The cost of the merchandise sold was $6,360. Mar. 15 April 15 May 15 Collected the amount owing from Hoffman Co. in full. Collected the Garrison note in full. (See February 15 transaction.) 31 July Accrued interest at year end. Sapounas Company dishonoured its note of February 1. The company is bankrupt and there is no hope of future settlement Sold $7,200 merchandise costing $4,320 to Weber Enterprises and accepted Weber's $7,200, three-month, 7% note for the amount due, with interest payable at maturity. The Weber Enterprises note was dishonoured. (See July 13 transaction. It is expected that Weber will eventually pay the amount owed. 13 Oct. 13 Date Account Titles and Explanation Debit Credit (To record sale on account.) (To record cost of goods sold.) (Accept note for accounts receivable.) (To record sale on account.) (To record cost of goods sold.) (To record sale on account.) (To record cost of goods sold.) (Collection on account.) (To record collection of note receivable and interest.) (To accrue interest earned.) (To write off note receivable and interest.) (To record sale on account.) (To record cost of goods sold.) (To record dishonouring of note where collection is expected.) Allowance for Doubtful Accounts Accounts Receivable - Sapounas Accounts Receivable - Hoffman Accounts Receivable - Weber Cost of Goods Sold Cash Interest Receivable Interest Revenue Merchandise Inventory Notes Receivable - Sapounas Notes Receivable - Garrison Notes Receivable - Weber No Entry Sales