Sweet Acacia Industries 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 $27,200. 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. 8,400 60 days July 24 10%
June 30 BMG Corp. 13,200 6 months December 31 6%
During July, the following transactions were completed.
July 5 Made sales of $4,310 on Sweet Acacia Industries credit cards.
14 Made sales of $600 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.)

Sweet Acacia Industries

Journal Entries:

July 5: Debit Cash $4,310

Credit Sales Revenue $4,310

To record sales on Sweet Acacia credit cards.

July 14: Debit Cash $582

Debit Service Charge Expense $18

Credit Sales Revenue $600

To record sales made on Visa credit cards with service charge of 3%.

July 20:  Debit Cash $5,712

Credit Notes Receivable (Coote Inc.) $5,600

Credit Interest Revenue $112

To record the receipt of full payment with interest.

July 24: Debit Cash $8,540

Credit Notes Receivable (Brady Co.) $8,400

Credit Interest Revenue $140

To record the receipt of full payment with interest.

July 31: Debit Interest Receivable (BMG Corp.) $66

Credit Interest Revenue $66

To accrue interest revenue for 30 days.

Explanation:

a) Data and Calculations:

June 30 balances of Notes Receivable:

Date        Maker        Face Value   Term   Maturity Date   Interest Rate

April 21   Coote Inc.     $5,600    90 days    July 20                  8%

May 25   Brady Co.        8,400    60 days    July 24                 10%

June 30  BMG Corp.    13,200    6 months December 31         6%

July 5: Cash $4,310 Sales Revenue $4,310

July 14: Cash $582 Interest Expense $18 Sales Revenue $600

July 20:  Cash $5,712 Notes Receivable (Coote Inc.) $5,600 Interest Revenue $112 ($5,600 * 8% * 90/360)

July 24: Cash $8,540 Notes Receivable (Brady Co.) $8,400 Interest Revenue $140 ($8,600 * 10% * 60/360)

July 31: Interest Receivable (BMG Corp.) $66 Interest Revenue $66 ($13,200 * 6% * 30/360)

the answer is i don't know

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