Problem: Melanie Griffith Company closes its books monthly. On September 30, selected ledger account balances are:
Notes Receivable $28,000
Interest Receivable $ 216
Notes Receivable include the following.
Date Maker Face Term Interest
Aug. 16 Foran Inc. $ 8,000 60 days 12%
Aug. 25 Drexler Co. 8,000 60 days 12%
Sept. 30 Sego Corp. 12,000 6 months 9%
Interest is computed using a 360-day year. During October, the following transactions were completed.
Oct. 7 Made sales of $6,900 on Melanie Griffith credit cards.
12 Made sales of $750 on MasterCard credit cards. The credit card service charge is 4%.
15 Added $485 to Melanie Griffith customer balance for finance charges on unpaid balances.
15 Received payment in full from Foran Inc. on the amount due.
24 Received notice that Drexler note has been dishonored. (Assume that Drexler is expected to pay in the future.)
Instructions:
(1) Journalize the October transactions and the October 31 adjusting entry for accrued interest receivable.
(2) Enter the balances at October 1 in the receivable accounts. Post the entries to all of the receivable accounts.
(3) Show the balance sheet presentation of the receivable accounts at October 31.