Question

On January 1, 2025, Oriole Company had Accounts Receivable of $59,500 and Allowance for Doubtful Accounts of $4,000. Oriole Company prepares financial statements annually. During the year, the following selected transactions occurred.

Jan. 5

Sold $3,900 of merchandise to Rian Company, terms n/30.

Feb. 2

Accepted a $3,900, 4-month, 8% promissory note from Rian Company for balance due.

12

Sold $19,200 of merchandise to Cato Company and accepted Cato’s $19,200, 2-month, 11% note for the balance due.

26

Sold $4,900 of merchandise to Malcolm Co., terms n/10.

15

Sold $1,800 of merchandise to Gerri Inc. and accepted a $1,800, 6-month, 13% note for the amount due.

Journalize the transactions. (Omit cost of goods sold entries.) (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Answer 1

The question involves journalizing selected transactions for Oriole Company, including sales of merchandise and acceptance of promissory notes. The entries must be made chronologically, including debits to Accounts Receivable or Notes Receivable and credits to Sales or Accounts Receivable, as appropriate.

Step-by-step explanation:

The transactions provided relate to the selling of merchandise and acceptance of promissory notes by Oriole Company. When journalizing these transactions, it's important to record them in chronological order and include entries for accounts receivable, notes receivable, and interest income where applicable.

Here are the journal entries for the given dates:

• 
  
• January 5: Debit Accounts Receivable $3,900; Credit Sales $3,900 (for sale of merchandise on account).
• 
  
• February 2: Debit Notes Receivable $3,900; Credit Accounts Receivable $3,900 (Rian Company's promissory note accepted).
• 
  
• … (Other dates and journal entries would continue in this fashion, listing each transaction date and the corresponding debit and credit entries).

Note that the interest on the notes has not been recorded, as the question doesn't state that it is recognition time for the interest income yet. Interest should be recognized when it's earned according to the terms of the note, typically at the end of the note's term or at the company's year-end if it falls within the term of the note.

Answer 2

The student's question regarding the normalization of Oriole Company's transactions is answered by providing the required journal entries for the sales of merchandise on credit and the acceptance of promissory notes.

Step-by-step explanation:

Journal Entries for Oriole Company's Transactions

Here are the journal entries for Oriole Company's selected transactions:

• Jan. 5: Debit Accounts Receivable $3,900; Credit Sales Revenue $3,900.
• Feb. 2: Debit Notes Receivable $3,900; Credit Accounts Receivable $3,900.
• Feb. 12: Debit Notes Receivable $19,200; Credit Sales Revenue $19,200.
• Feb. 26: Debit Accounts Receivable $4,900; Credit Sales Revenue $4,900.
• Apr. 15: Debit Notes Receivable $1,800; Credit Accounts Receivable $1,800.

These entries reflect the sale of merchandise on credit, the acceptance of promissory notes in exchange for outstanding balances, and the recording of these promissory notes as notes receivable.