Question

Record the following transactions on the books of Wildhorse Co.:

On May 1, Wildhorse Co. sold merchandise on account to Kaneva Inc. for $42,000, terms 2/10, n/30. Ignore any entries that affect inventory, cost of goods sold, and refund liability for the purposes of this question. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
May 1
	(To record sale on account.)

On June 30, Wildhorse Co. charged Kaneva Inc. one month’s interest for the overdue account. Wildhorse charges 10% on overdue accounts. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
June 30
	(To record interest earned.)

On July 5, Kaneva paid the amount owing to Wildhorse Co. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
July 5
	(Collection on account.)

Answer 1

Journal entries
S.no.	Accounts title nd explanations		Debit $	Credit $
a.	Accounts receivable			42000
	Sales revenue				42000
	(for sales made on account)
b.	Accounts receivable (42000*10%*1/12)	350
	Interest revenue				350
	(for charge of interest for 1 month)
c.	Cash account			42350
	Accounts receivable (42000+350)		42350
	(for cash received)