Question

Kingbird, Inc. closes its books on its July 31 year-end. The company does not make entries to accrue for interest except at its year-end. On June 30, the Notes Receivable account balance is $ 26,600. Notes Receivable include the following. Date Maker Face Value Term Maturity Date Interest Rate April 21 Coote Inc. $ 5,600 90 days July 20 8% May 25 Brady Co. 9,000 60 days July 24 10% June 30 BMG Corp. 12,000 6 months December 31 8% During July, the following transactions were completed. July 5 Made sales of $ 4,850 on Kingbird, Inc. credit cards. 14 Made sales of $ 800 on Visa credit cards. The credit card service charge is 3%. 20 Received payment in full from Coote Inc. on the amount due. 24 Received payment in full from Brady Co. on the amount due.

Journalize the July transactions and the July 31 adjusting entry for accrued interest receivable. (Interest is computed using 360 days; omit cost of goods sold 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.)

Answer 1

Ans- The journal entries in the books of Kingbird, Inc.

Date	Account Titles and Explanation	Debit ($)	Credit ($)
July 5	Account receivable A/c Dr.	4,850
	Sales revenue A/c		4,850
	(To record company credit card sales)
July 14	Cash A/c Dr.	776
	Service charge expense A/c Dr.($800*3%)	24
	Sales A/c		800
July 20	Cash A/c Dr.	5,712
	Notes receivable A/c -Coote Inc.		5,600
	Interest revenue A/c($5,600*8%*3/12)		112
	(To record collection of notes receivable)
July 24	Cash A/c Dr.	9,150
	Notes receivable-Brady Co.		9,000
	Interest revenue A/c ($9,000*10%*2/12)		150
	(To record collection of notes receivable)
July 31	Adjusting Entry:-
	Interest receivable A/c($12,000*8%*1/12)	80
	Interest revenue A/c		80
	(To record accured interest revenue)

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