Question

Prepare journal entries to record the following transactions entered into by the Merando Company: 2016 June 1 Received a $10,000, 6%, 1-year note from Dan Gore as full payment on his account. Nov. 1 Sold merchandise on account to Barlow, Inc., for $14,000, terms 2/10, n/30. Nov. 5Barlow, Inc., returned merchandise worth $1,000. Nov. 9 Received payment in full from Barlow, Inc. Dec.31 Accrued interest on Gore's note. 2017 June 1 Dan Gore honored his promissory note by sending the face amount plus interest.Date Account Title and Explanation Debit Credit

Answer 1

Answer and Explanation:

The Journal entries are prepared below:-

1. Notes Receivable Dr $10,000  

   To dan Gore $10,000

(Being notes receivable is recorded)

2. Barlow Dr $14,000  

    To Inventories $14,000

(Being inventory is recorded)

3. Inventories Dr, $1,000  

   To Barlow $1,000

(Being inventory is recorded)

4. Cash Dr, $12,740 ($13,000 × 98%)

Discount Dr, 260

      To Barlow $13,000

(Being cash received is recorded)

5. Interest receivable Dr, $350  ($10,000 × 6% × 7 ÷ 12)

            To Interest revenue $350

(Being interest revenue is recorded)

6. Cash Dr, $10,600

           To Interest receivable $350

            To Interest revenue $250 ($10,000 × 6% × 5 ÷ 12)

            To Notes receivable $10,000

(Being cash received is recorded)