Question

Company, a construction supply company, uses the allowance method o transactions completed by nting for uncollectible accounts receivable. Selected transactions co Ditzler Company are as follows: Ditzler 1 Sold merchandise on account to Ames Co., $8,000. The cost of the mer- Feb. chandise sold was $4,500. Mar 15, Accepted a 60-day, 12% note for $8,000 from Am Anr 9. Wrote off a $2,500 account from Dorset Co. as uncollectible. es Co. on account. Loaned $7,500 cash to Jill Klein, receiving a 90-day, 14% note. 21. May 14, Received the interest due from Ames Co. and a new 90-day, 14% note as a renewal of the loan. (Record both the debit and the credit to the notes receivable account.) June 13. Reinstated the account of Dorset Co, written off on April 9, and received $2,500 in full payment. Jill Klein dishonored her note. July 20. 8 Received from Ames Co. the amount due on its note of May 14. interest for 30 days at 15%, computed on the maturity value of the note. It is estimated that 3% of the credit sales of $1,375,000 for the year ended Au g. 12. 19. Received from Jill Klein the amount owed on the dishonored note, plus ec. 16. Accepted a 60-day, 12% note for $12,000 from Global Company on account. 31. December 31 will be uncollectible. structions Journalize the transactions. Journalize the adjusting entry to record the accrued interest on December 31 on the Global Company note.

Answer 1

Date	Account	Debit	Credit
Feb 1	Accounts Receivable	$        8,000
Feb 1	Sales Revenue		$        8,000
Feb 1	Cost of Merchandise Sold	$        4,500
Feb 1	Merchandise Inventory		$        4,500
Mar 15	Note Receivable 12%	$        8,000
Mar 15	Accounts Receivable		$        8,000
Apr 9	Allowance for Doubtful Accounts	$        2,500
Apr 9	Accounts Receivable		$        2,500
Apr 21	Note Receivable 14%	$        7,500
Apr 21	Cash		$        7,500
May 14	Cash	$           160		8000*12%*2/12
May 14	Interest Income		$           160
May 14	Note Receivable 14%	$        8,000
May 14	Note Receivable 12%		$        8,000
Jun 13	Accounts Receivable	$        2,500
Jun 13	Allowance for Doubtful Accounts		$        2,500
Jun 13	Cash	$        2,500
Jun 13	Accounts Receivable		$        2,500
Jul 20	Accounts Receivable	$        7,763		Plug
Jul 20	Interest Income		$           263	7500*14%*3/12
Jul 20	Note Receivable 14%		$        7,500
Aug 12	Cash	$        8,280
Aug 12	Interest Income		$           280	8000*14%*3/12
Aug 12	Note Receivable 14%		$        8,000
Aug 19	Cash	$        7,594		7500*15%*1/12+7500
Aug 19	Accounts Receivable		$        7,594
Dec 16	Note Receivabl 12%	$     12,000
Dec 16	Cash		$     12,000
Dec 31	Bad Debt Expense	$     41,250		1375000*3%
Dec 31	Allowance for Doubtful Accounts		$     41,250
Adjusting Entry:
Dec 31	Interest Receivable	$             60
Dec 31	Interst Income		$             60
	(12000*12%*15/360)