Farwell Company closes its books monthly. On September 30, selected ledger account balances are:
Interest is computed using a 360-day year. During October, the following transactions were completed.
| Oct. 7 | Made sales of $6,900 on Farwell credit cards |
| 12 | Made sales of $900 on MasterCard credit cards. The credit card service charge is 3% |
| 15 | Added $460 to Farwell customer balances for finance charges on unpaid balances |
| 15 | Received payment in full from K. Goza Inc. on the amount due. |
| 24 | Received notice that the Holt note has been dishonored. (Assume that Holt is expected to pay in the future |
Instructions
- Journalize the October transactions and the October 31 adjusting entry for accrued interest receivable.
- Enter the balances at October 1 in the receivable accounts. Post the entries to all of the receivable accounts. There was no opening balance in accounts receivable.
- Show the balance sheet presentation of the receivable accounts at October 31
Solution
a.
Farwell Company
Journal Entries
Journal Entries
b.
c.
Farwell Company
Balance Sheet (Partial)
Balance Sheet (Partial)
