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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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