Question

Wildhorse Co.closes its books on its July 31 year-end. The company does not make entries to accrue for interest except at its year-end. On June 30, the Notes Receivable account balance is $26,800. Notes Receivable include the following. Date Maker Face Value Term Maturity Date Interest Rate 8% April 21 Coote Inc. May 25 Brady Co. June 30 BMG Corp. $5,200 90 days July 20 8,400 60 days July 24 13,200 6 months December 31 10% 69 During July, the following transactions were completed. July 5 Made sales of $4.900 on Wildhorse credit cards. 14 Made sales of $800 on Visa credit cards. The credit card service charge is 2%. 20 Received payment in full from Coote Inc on the amount due. 24 Received payment in full from Brady Co. on the amount due. (b) Enter the balances at July 1 in the receivable accounts and post the entries to all of the receivable accounts. (Post entries in the order of journal entries posted in the previous part.) Notes Receivable Accounts Receivable Interest Receivable

Answer 1

Solution:

A. Journal Entries for the month of July Date General Journal Jul-05 Accounts Receivable Sales Amount $ Amount $ 4,900 4,900 800 Jul-14 Accounts Receivable Sales 800 784 Jul-14 Cash Service Charges Accounts Receivable 16 800 5,304 Jul-20 Cash Note Receivable Interest Revenue (5,200 * 8% * 90/360) 5,200 104 Jul-24 Cash Note Receivable Interest Revenue (8,400 * 10% * 60/360) 8,400 140 Jul-31 Interest Receivable Interest Revenue (13,200 * 6% * 1/12)

B. Posting of Journal Entries to Ledger Accounts Notes Receivable Account Particulars Amount Particulars To Balance b/d 26,800 By Cash By Cash By Balance c/d 26,800 Amount $ 5,2001 8,400 13,2001 26,800 Amount s 784 Particulars To Balance b/d To Sales To Sales Accounts Receivable Account Amount $ Particulars 0 By Cash 4,900 By Service Charges 800 By Balance c/d 5,700 16 4,900 5,700 Interest Receivable Account Amount $ Particulars Amount $ Particulars To Balance b/d To Interest Revenue 66 By Balance c/d 66 66