Question

On January 1, 2022, Harvee Company had Accounts Receivable of $54,200 and Allowance for Doubtful Accounts of $3,700. Harvee Company prepares financial statements annually. During the year, the following selected transactions occurred: Jan. 5 Sold $4,000 of merchandise to Rian Company, terms n/30. Feb. 2 Accepted a $4,000, 4-month, 9% promissory note from Rian Company for balance due. 12 Sold $12,000 of merchandise to Cato Company and accepted Cato’s $12,000, 2-month, 10% note for the balance due. 26 Sold $5,200 of merchandise to Malcolm Co., terms n/10. Apr. 5 Accepted a $5,200, 3-month, 8Journalize the transactions. (Omit cost of goods sold entries.)

Answer 1

Answer:

Jan. 5

Dr Account Receivable                $4,000

  Cr Sales                                      $4,000

(to record sales to Rian)

Feb. 2

Dr Promissory note Receivable   $4,000

  Cr Account Receivable              $4,000

(to record acceptance of Rian company's note)

Feb. 12

Dr Promissory note Receivable    $12,000

  Cr Sales                                       $12,000  

(to record sales to Cato company through acceptance its notes)

Feb. 26

Dr Account Receivable                  $5,200

  Cr Sales                                        $5,200

(to record sales to Malcolm)

Apr. 5

Dr Promissory note Receivable     $5,200

  Cr Account Receivable                $5,200

( to record acceptance of Malcolm notes)

Apr. 12 ( assume Cato's note is collected)

Dr Cash                                              $12,200

Cr Promissory note Receivable       $12,000

Cr Interest Income                           $200

(to record the collection of Cato's note)

June. 2 ( assume Rian's note is collected)

Dr Cash                                              $4,120

Cr Promissory note Receivable       $4,000

Cr Interest Income                           $120

(to record the collection of Rian's note)

Jul. 5

Dr Cash                                              $5,304

Cr Promissory note Receivable       $5,200

Cr Interest Income                           $104

(to record the collection of Malcolm's note)

Explanation:

The calculation of Interest income from the Notes of the three companies as followed:

Rian: 4,000 x 9% x 4/12 = $120

Cato: 12,000 x 10% x 2/12 = $200

Malcolm: 5,200 x 8% x 3/12 = $104.

Further explanation has been put as description under each journal entries listed above.

Cost of goods sold is not included for each sales entries as guided in the question.