Prepare Journal Entries of Transactions of Morgan Company-Multiple Choice Question

Question

An inexperienced accountant for Morgan Company made the following incorrect entries.

1. Notes Receivable ........................................................................... 21,600

                                          Accounts Receivable ............................................................. 20,000

                                           Interest Revenue ................................................................... 1,600

Facts: Accepted a $20,000, 1 year, 8% note from Joe Wood Company for balance due on

2. Accounts Receivable ...................................................................... 20,000

                                           Sales Revenue ..................................................................... 20,000

Facts: Accepted Visa credit card for $20,000; the service fee is 2%.

3. Allowance for Doubtful Accounts .................................................... 12,300

                                         Notes Receivable ................................................................... 12,000

                                             Interest Revenue ................................................................... 300

Facts: M. Adler dishonored a $12,000, 10%, 3-month note because of bankruptcy. Adler is expected to pay. No interest had been accrued on the note.

Instructions

Prepare entries to correct Morgan Company's books based on the facts given. Do not reverse out incorrect entries that were recorded above, but rather correct the account balances so that they reflect the proper amounts.