Is the buyer open to buy and, if so, how much?

4. Your Notes Receivable account shows $25,000 of customers’ notes on hand. Being in need of cash you discount $10,000 of these at the bank, receiving therefor a credit of $9,750 in your bank account. Fifteen days later the bank notifies you that $4,000 of these notes have been paid by their makers at maturity, but that a note for $1,000 signed by J. B. Grant has been charged back on account of non-payment.

Make all the entries, in journal form, to record the above.

5. On April 1, 19—, Jones of Trenton, N. J., ships an invoice of goods to Smith in New York. The goods are valued at $2,000, and the consignor pays freight amounting to $40, and insurance $30. The consignee pays cartage amounting to $50, and storage $40. On April 2, Jones draws a 30-day draft against Smith for $500, which is duly accepted on April 5. The goods are sold for $2,700. Smith’s commission is 5%.

Set up the necessary accounts both on the books of the consignor and on those of the consignee properly to reflect the above transactions.

6. Prepare the closing entries for the following consignment sale. The consignment was received July 8, account of William Nevins & Co., showing an invoice value of $3,750. You paid freight and cartage $87.50, and insurance $18.75. Sales were made July 16, $1,000, and July 25, $1,525, on a 5% commission basis. On July 31, upon closing your books, you inventory the unsold balance of the consigned goods as $2,500.

7. From the following data, relating only to customers and creditors, prepare as of December 31, 19—, Accounts Receivable and Accounts Payable accounts. Indicate in folio column the book of original entry from which each item is obtained.

1.Accounts receivable, balance January 1, 19—$1,200.00
2.Accounts payable, balance January 1, 19—1,350.00
3.Sales4,000.00
4.Purchases2,500.00
5.Return sales200.00
6.Return purchases100.00
7.Cash received from customers3,200.00
8.Discount allowed customers100.00
9.Cash paid creditors1,800.00
10.Discount allowed us50.00
11.Customers’ notes indorsed to creditors500.00
12.Notes received from customers600.00
13.Freight paid by us for customers40.00
14.Cash received from creditor for overpayment20.00
15.Customer’s check deposited returned by bank300.00
16.Customer’s note indorsed to creditor (see item 11)
dishonored and returned250.00
17.Protest fees on above5.00
18.Allowance for damages on goods purchased30.00
19.Cash returned to customer for overpayment10.00
20.In item 3 (Sales) included in total sales was one
to creditor100.00

XXVII