Farwell Company closes its books monthly. On September 30, selected ledger account balances are

Farwell Company closes its books monthly. On September 30, selected ledger account balances are:

Interest is computed using a 360-day year. During October, the following transactions were completed.

Oct. 7	Made sales of $6,900 on Farwell credit cards
12	Made sales of $900 on MasterCard credit cards. The credit card service charge is 3%
15	Added $460 to Farwell customer balances for finance charges on unpaid balances
15	Received payment in full from K. Goza Inc. on the amount due.
24	Received notice that the Holt note has been dishonored. (Assume that Holt is expected to pay in the future

Instructions

Journalize the October transactions and the October 31 adjusting entry for accrued interest receivable.
Enter the balances at October 1 in the receivable accounts. Post the entries to all of the receivable accounts. There was no opening balance in accounts receivable.
Show the balance sheet presentation of the receivable accounts at October 31

Solution

a.

Farwell Company
Journal Entries

b.

c.

Farwell Company
Balance Sheet (Partial)

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