The series of seven transactions recorded in the following T accounts were related to a sale to a customer on account and the receipt of the amount owed

The series of seven transactions recorded in the following T accounts were related to a sale to a customer on account and the receipt of the amount owed. Briefly describe each transaction.


CASH NOTES RECEIVABLE
(7) 61,509 (5) 60,000 (6) 60,000
ACCOUNTS RECEIVABLE SALES RETURNS AND ALLOWANCES
(1) 75,000 (3) 15,000 (3) 15,000
(6) 60,600 (5) 60,000
(7) 60,600
MERCHANDISE INVENTORY COST OF MERCHANDISE SOLD
(4) 9,000 (2) 45,000 (2) 45,000 (4) 9,000
SALES INTEREST REVENUE
(1) 75,000 (6) 600
(7) 909






Answer:
1. Sale on account.
2. Cost of merchandise sold for the sale on account.
3. A sale return or allowance.
4. Cost of merchandise returned.
5. Note received from customer on account.
6. Note dishonored and charged maturity value of note to customer’s account receivable.
7. Payment received from customer for dishonored note plus interest earned after due date.




Journalize the following transactions of Sanchez Productions:

July 12. Received a $240,000, 120-day, 7% note dated July 12 from Accolade Co. on account.

Nov. 9. The note is dishonored by Accolade Co.

Dec. 9. Received the amount due on the dishonored note plus interest for 30 days at 9% on the total amount charged to Accolade Co. on November 9.


Answer:













July 12 Notes Receivable 240,000
Accounts Receivable—Accolade Co. 240,000
Nov. 9 Accounts Receivable—Accolade Co. 245,600
Notes Receivable 240,000
Interest Revenue 5,600
($240,000 × 0.07 × 120/360).
Dec. 9 Cash 247,442
Accounts Receivable—Accolade Co. 245,600
Interest Revenue 1,842
($245,600 × 0.09 × 30/360).