Question

The weighted average cost method uses the cost for cost of goods sold on the income statement and the cost for inventory on the balance sheet. average, averege average, newest newest average oldest averege averege, oldest

Answer 1

Journal Entries:

	Date	Account title and explanation	Debit	Credit
a	Oct. 1	Accounts receivable	$23,500
		Sales revenue		$23,500
		[To record sales on account]
b	Nov.1	Notes receivable	$23,500
		Accounts receivable		$23,500
		[To record notes receivable from accounts receivable]
c	Dec.31	Interest receivable	$392
		Interest revenue*		$392
		[To record accrued interest expense]
d	Jan.31	Cash	$588
		Interest receivable		$392
		Interest revenue**		$196
		[To record interest received]
e	Jan.31	Cash	$23,500
		Notes receivable		$23,500
		[To record principal received]

Calculations:

* Interest revenue on Dec.31:

Interest revenue for 60 days (Nov.1 to Dec.31) = $23,500 x 10% x (60 days/360 days)

Interest revenue = 2,350 x 60/360

Interest revenue = $392

** Interest revenue on Jan.31

Interest revenue for 30 days (Dec 31 to Jan.31) = $23,500 x 10% x (30 days/360 days)

Interest revenue = 2,350 x 30/360

Interest revenue = $196

Assumed that 360 days in a year.