Problem 9-6a farewell company_note receivable – interest receivable

Problem 9-6A

Farewell Company closes its books monthly. On September 30, selected ledger account balances are

Notes Recceivable           33,300

Interest receivable              260

 

Notes receivable include the followings:

 

Date                      Maker                   Face                       Term                     Interest

Aug. 16                 K. Goza Inc.        9,600                     60 Days                 12%

Aug. 25                 Holt Co.                                10,500                   60 Days                 11%

Sept. 30                Noblkt Corp        13,200                   6 months             13%

 

Interest is computed using a 360 day year. During October, the following transactions were completed

Oct. 7 – Made sales of $6,790 on Farewell credit cards.

Oct. 12 Made sales of $800 on Master Credit cards. The credit card service charges is 2%.

Oct. 15 – Added $540 to Farewell customer balances for finance charges on unpaid balances.

Oct. – 15 Received payment in full from K. Goza Inc. on the amount due.

Oct. – 24 Received notice that the Holt note has been dishonoured. (Assume that Holt is expected to pay in the future.

          Journalize the transactions and the October 31 adjusting entry for the accrued interest receivable.

          Enter the balances at October 1 in the receivable accounts. Post the entries to all of the receivable accounts.

 

          Show the balance sheet presentation of the receivable at October 31.

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