Question

Prepare the general journal entries for Infinity Diner for the following notes receivable transactions (assuming there are 28 days in February). When required, enter amounts to the nearest cent. If an amount box does not require an entry, leave it blank. Dec. 3 Sold merchandise to Brian Chan on account, $6,900. 11 Sold merchandise to Gloria Lupo on account, $3,600. Jan. 2 Received a $6,900, 10%, 30-day note from Brian Chan in payment of account. 10 Received a $3,600, 12%, 30-day note from Gloria Lupo in payment of account. Feb. 1 Received $600, plus interest on January 2 note, and a new, 14% 60-day note for the remaining balance. Feb. 9 On the maturity date, note dated January 10 was dishonored. Apr. 2 On the maturity date, Infinity Diner received principal and interest for February 1 note.

Answer 1

Infinity Diner

General Journal Entries:

Dec. 3 Debit Accounts receivable (Brian Chan) $6,900

Credit Sales Revenue $6,900

To record the sale of merchandise on account.

Dec. 11 Debit Accounts receivable (Gloria Lupo) $3,600

Credit Sales Revenue $3,600

To record the sale of merchandise on account.

Jan. 2 Debit 10% Notes receivable (Brian Chan) $6,900

Credit Accounts receivable (Brian Chan) $6,900

To record the acceptance of a 30-day note in payment of account.

Jan. 10 Debit 12% Notes receivable (Gloria Lupo) $3,600

Credit Accounts receivable $3,600

To record the acceptance of a 30-day note in payment of account.

Feb. 1 Debit Cash $657.50

Debit 14% Notes receivable (Brian Chan) $6,300

Credit 10% Notes receivable (Brian Chan) $6,900

Credit Interest revenue $57.50

To record the acceptance of a 60-day note for the remaining balance.

Feb. 9 Debit Accounts receivable (Gloria Lupo) $3,636

Credit 12% Notes receivable (Gloria Lupo) $3,600

Credit Interest revenue $36

To record the dishonor of note on maturity date.

Apr. 2 Debit Cash $6,447

Credit 14% Notes receivable (Brian Chan) $6,300

Credit Interest revenue $147

To record the receipt of cash for full settlement on account.

Step-by-step explanation:

a) Data and Analysis:

Dec. 3 Accounts receivable (Brian Chan) $6,900 Sales Revenue $6,900

Dec. 11 Accounts receivable (Gloria Lupo) $3,600 Sales Revenue $3,600

Jan. 2 10% Notes receivable (Brian Chan) $6,900 Accounts receivable (Brian Chan) $6,900 30-day note in payment of account.

Jan. 10 12% Notes receivable (Gloria Lupo) $3,600 Accounts receivable $3,600 30-day note in payment of account.

Feb. 1 Cash $657.50 14% Notes receivable (Brian Chan) $6,300 10% Notes receivable (Brian Chan) $6,900 Interest revenue $57.50 60-day note for the remaining balance.

Feb. 9 Accounts receivable (Gloria Lupo) $3,636 Notes receivable (Gloria Lupo) $3,600 Interest revenue $36

Apr. 2 Cash $6,447 14% Notes receivable (Brian Chan) $6,300 Interest revenue $147