Question

On January 1, 2017, Blossom Company had Accounts Receivable of $51,600 and Allowance for Doubtful Accounts of $4,100. Blossom Company prepares financial statements annually. During the year, the following selected transactions occurred:

Jan. 5 Sold $4,600 of merchandise to Rian Company, terms n/30.
Feb. 2 Accepted a $4,600, 4-month, 9% promissory note from Rian Company for balance due.
12 Sold $11,100 of merchandise to Cato Company and accepted Cato’s $11,100, 2-month, 10% note for the balance due.
26 Sold $11,700 of merchandise to Malcolm Co., terms n/10.
Apr. 5 Accepted a $11,700, 3-month, 8% note from Malcolm Co. for balance due.
12 Collected Cato Company note in full. June 2 Collected Rian Company note in full.
15 Sold $2,100 of merchandise to Gerri Inc. and accepted a $2,100, 6-month, 12% note for the amount due.
Journalize the transactions. (Omit cost of goods sold entries.)

Answer 1

Blossom Company

Journal Entries:

Jan. 5

Debit Accounts Receivable (Rian Company) $4,600

Credit Sales Revenue $4,600

To record credit sales.

Feb. 2:

Debit 9% Note Receivable $4,600

Credit Accounts Receivable $4,600

To record the transfer.

Feb. 12

Debit Notes Receivable (Cato Company) $11,100

Credit Sales Revenue $11,100

To record the sale in exchange for 10% note.

Feb. 26:

Debit Accounts REceivable (Malcom Co.) $11,700

Credit Sales Revenue $11,700

To record sales on account, terms n/10.

Apr. 5:

Debit Notes Receivable $11,700

Credit Accounts Receivable $11,700

To transfer the balance to a 3-month 8% notes receivable

Apr. 12:

Debit Cash Account $11,285

Credit Interest on Notes Receivable $185

Credit Notes Receivable $11,100

To record full settlement of notes receivable.

Apr. 15:

Debit Notes Receivable $2,100

Credit Sales Revenue $2,100

To record the sale of goods and acceptance of 6-month 12% note.

Step-by-step explanation:

Journal entries record business transactions for the first time. The accounts to be debited and credited are identified and these are entered into the journal. It is from the journal that postings are made to the general ledger.