Question

Valley Hardware Supply, Inc., sells on account. When a customer account becomes four months old, Valley Hardware Supply converts the account to a note receivable. During 2018, Valley Hardware Supply completed these transactions:

Jan 29 Sold goods on account to peter's hardware Inc., $6,200. Ignore the cost of goods sold.

Jan 1 Received a $6,200, 60-day, 9% note from Peter's Hardware, Inc., in satisfaction of its past- due account receivable.

Jul 31 Collected the Perter's Hardware, Inc., note at maturity. Use a 360-day year for interest computation and round to the nearest dollar.

1. Record the transactions in Valley Hardware Supply, Inc.'s journal.

Answer 1

Journal Entries in the Book of Valley Hardware Supply Inc. Description 29-01-2018 Peter's Hardware Inc Debit Credit Date 6,200.00 $ Sales 6,200.00 (To record the sale of goods) 01-06-2018 Note Receivables $ 6,200.00 $ Peter's Hardware Inc. 6,200.00 (To record the Note receivables) 31-07-2018 Cash $ 6,293.00 $ Note Receivables 6,200.00 $ Interest Revenue 93.00 (To record the Cash received on Note receivables & interest) Working Interest Revenue 9% of $6200 for 60 days $6200 x 9% x 60/360 $ 93.00

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