Reference no: EM132518575

Kolton Company 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 $23,800. Notes Receivable include the following.

Date            Maker         Face Value         Term           Maturity Date                Interest Rate

April 21        Booth Inc.    $ 6,000          90 days             July 20                          8%

May 25          Manning Co.  7,800            60 days            July 24                        10%

June 30        ANF Corp.       10,000         6 months            December 31                 6%

1. During July, the following transactions were completed.
2. July 5 Made sales of $4,500 on Kolton credit cards.
3. 14 Made sales of $600 on Visa credit cards. The credit card service charge is 3%.
4. 20 Received payment in full from Booth Inc. on the amount due.
5. 24 Received payment in full from Manning Co. on the amount due.

Instructions

Question (a) 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.)

Question (b) Enter the balances at July 1 in the receivable accounts and post the entries to all of the receivable accounts. (Use T-accounts.)

Question (c) Show the balance sheet presentation of the receivable accounts at July 31