Question

Prepare journal entries to record the following transactions entered into by the Valente Company: (Credit account titles are automatically indented when the amount is entered. Do not indent manually. ) 2020 June 1 Received a $10,000, 12%, 1-year note from Andrea Foley as full payment on her account. Nov. 1 Sold merchandise on account to Patton, Inc. For $12,000, terms 2/10, n/30. Nov. 5 Patton, Inc. Returned merchandise worth $500. Nov. 9 Received payment in full from Patton, Inc. Dec. 31 Accrued interest on Foley's note. 2021 June 1 Andrea Foley honored her promissory note by sending the face amount plus interest. No interest has been accrued in 2021

Answer 1

The Journal entries are prepared for Valente Company.

1. Date    Accounts and Explanation               Debit                        Credit

2020 June 1   Notes Receivable                    $10,000  

       To Andrea Foley                                                                       $10,000

(Being notes receivable is recorded)

2. Date    Accounts and Explanation               Debit                        Credit

    Nov. 1                      Patton, Inc.                    $14,000                                                                

   To Inventories                                                                               $14,000

(Being inventory is recorded)

3.Date    Accounts and Explanation               Debit                        Credit

                       Inventories                               $500

                        Patton, Inc                                                                    $500

(Being inventory is recorded)

4..Date    Accounts and Explanation               Debit                        Credit

           Cash                                                   $11,270

       Discount                                                    $ 230

  To Barlow                                                                                   $11,500

(Being cash received is recorded)

Patton, Inc invoice transactions:

12,000   invoice nominal

- $500  returned goods

$11,500.   amount subject to discount of 2%

- 230 discount as collected within first ten days

11,270cash proceeds

6.Date    Accounts and Explanation               Debit                        Credit

            Cash                                              $12,600

          To Interest revenue                                                              $600
       ($12,000 × 12% × 5 ÷ 12)

           To Notes receivable                                                        $12,000

(Being cash received is recorded)

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