Lorenz Company closes its books on July 31

ACCOUNTING
Warren, Reeve and Duchac

Financial Accounting
Managerial Accounting
Carl Warren, James M. Reeve, Jonathan E. Duchac
Chapter 8
Problem 8-8A (P8-8A) Lorenz Company closes its books on July 31. 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
May 21 Agler Inc. $ 6,000 60 days July 20 8%
May 25 Girard Co. 7,800 60 days July 24 10%
June 30 LSU Corp. 10,000 6 months December 31 9%
During July the following transactions were completed.
July 5 Made sales of $5,100 on Lorenz credit cards.
14 Made sales of $600 on Visa credit cards. The credit card service charge is 3%.
20 Received payment in full from Agler Inc. on the amount due.
24 Received payment in full from Girard Co. on the amount due.
Instructions
(a) Journalize the July transactions and the July 31 adjusting entry for accrued interest receivable. (Interest is computed using 360 days.)
(b) Enter the balances at July 1 in the receivable accounts and post the entries to all of the receivable accounts. (Use T accounts.)
(c) Show the balance sheet presentation of the receivable accounts at July 31.

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