Question

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

Answer 1

27 Date 28 1-Feb Accounts Receivable - Ames Co 29 30 31 32 Account Title & Explanation Debit Credit 8000 Sales Revenue 8000 To record inventory sold) Cost of Goods Sold (To record cost of inventory sold) 4500 Merchandise Inventory 4500 34. 35 36 15-Mar Notes Receivable Ames Co 37 38 39 40 9-Apr Allowance for Doubtful Accounts 41 42 43 44 21-Apr Notes Receivable - Jill Klein 45 46 47 8000 Accounts Receivable Ames Co To record acceptance of notes receivable) 8000 Accounts Receivable - Dorset Co o record wrote off accounts Cash To record acceptance of notes receivable)