Solution and Explanation:
date Particulars Debit Credit
1st january, 2019 Account receivable 500
Sales revenue 500
(To record sales on account)
Cost of goods sold 310
Merchandise inventory 310
(To record cost of goods sold)
31st january, 2019 Notes receivable 500
Accounts receivable 500
(To record notes receivable for the 60 days at the rate of 6 percent)
1st April, 2019 Allowances for Doubtfull accounts 500
Notes receivable 500
(In order to write off Sally Millers account, no interest revenue is to be recognised)
2nd May, 2019 Notes receivable 500
Allowances for doubtful debts 500
( in order to record re-instatement)
2nd May, 2019 Cash 507.50
Notes receivable 500
Interest revenue 7.5
( In order to record the payment received)
