Explore BrainMass

Fundamental Accounting Principles

Section One: P1-6B
P1-6B On January 1, 2002, Case Western Company had Accounts Receivable of $54,200 and Allowance for Doubtful Accounts of $4,700. Case Western Company prepares financial statements annually. During the year the following selected transactions occurred.
Jan 5 Sold 7,000 of merchandise to Garth Brooks Company, terms n/30.
Feb 2 Accepted a $7,000, 4-month, 12% promissory notes from Garth Brooks Company for balance due.
Feb 12 Sold 7,800 of merchandise to Gage Company and accepted Gage's 7,800, 2-month, 10% note for the balance due.
Feb 26 Sold $4,000 of merchandise to Mathias Co., terms n/10.
Apr. 5 Accepted a $4,000, 3-month, 8% notes from Mathias Co. for balance due.
Apr. 12 Collected Gage Company note in full.
June 2 Collected Garth Brooks Company note in full.
July 5 Mathias Co. dishonors its note of April 5. It is expected that Mathias will eventually pay the amount owed.
July 15 Sold $5,000 of merchandise to Tritt Co. and accepted Tritt's $5,000, 3-month, 12% note for the amount due.
Oct. 15 Tritt Co.'s note was dishonored. Tritt Co. is bankrupt, and there is no hope of future settlement.
Instructions in Microsoft Excel
Journalize the transactions.

Solution Preview

Hi there,
<br>Here are your journal entries:
<br>Sale of merchandise
<br>DR: Accounts receivable 7,000
<br>CR: Sales revenue 7,000
<br>DR: Cost of goods sold 7,000
<br>CR: Merchandise inventory 7,000
<br>2/2/02 Accepting of promisary note
<br>DR: Cash 7,000
<br>CR: Short Term note 7,000
<br>2/12/02 Sale of merchandise
<br>DR: Accounts receivable 7,800
<br>CR: ...

Solution Summary

This question involves the fundamentals of accounting