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1 May, 18:31

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.)

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  1. 1 May, 18:44
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    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.
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