Question

Problem 9-06A a-c Pharoah Company 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 $23,600. Notes Receivable include the following. Date Maker Face Value Term Maturity Date Interest Rate April 21 Coote Inc. $5,600 90 days July 20 7% May 25 Brady Co. 7,200 60 days July 24 9% June 30 BMG Corp. 10,800 6 months December 31 5% During July, the following transactions were completed. July 5 14 Made sales of $5,400 on Pharoah credit cards. Made sales of $900 on Visa credit cards. The credit card service charge is 4%. Received payment in full from Coote Inc. on the amount due. Received payment in full from Brady Co. on the amount due. 20 24 Journalize the July transactions and the July 31 adjusting entry for accrued interest receivable. (Interest is computed using 360 days; omit cost of goods sold entries.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. Round intermediate calculations to 2 decimal places, e.g. 225.25.)

Answer 1

Date	Account titles & Explanations					Debit	Credit
5-Jul	Accounts receivable					5,400
	sales revenue						5,400
14-Jul	Cash					864
	Service charge expense					36
	Sales revenue						900
20-Jul	Cash					5,698
	interest revenue		(5,600*7%*90/360)				98
	notes receivable						5,600
24-Jul	Cash					7,308
	interest revenue		(7,200*9%*60/360)				108
	notes receivable						7,200
31-Jul	interest receivable		(10800*5%*1/12)			45
	interest revenue						45
		Notes receivable
1-Jul	23,600	20-Jul	5,600
		24-Jul	7,200
31-Jul	10,800
	Account receivable
5-Jul	5,400
31-Jul	5,400
	interest receivable
31-Jul	45	31-Jul
31-Jul	45	31-Jul
	Balance sheet
	As on july 31
Current Assets
Accounts receivable			5,400
interest receivable			45
notes receivable			10,800
total current assets			16,245