Question

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The general ledger of Pop's Fireworks includes the following account balances in 2021:

 

Accounts	Debit				Credit
Cash	$	21,200
Accounts Receivable		41,500
Allowance for Uncollectible Accounts					$	2,200
Supplies		6,700
Notes Receivable (8%, due in 2 years)		10,000
Land		85,000
Accounts Payable						12,300
Common Stock						106,000
Retained Earnings						29,900
Service Revenue						124,800
Salaries Expense		70,900
Utilities Expense		24,200
Supplies Expense		15,700
Totals	$	275,200			$	275,200

 

In addition, the following transactions occurred during 2021 and are not yet reflected in the account balances above:

 

June		3		Provide additional services on account for $7,000. All services on account include terms 2/10, n/30.
June		8		Receive cash from customers within 10 days of the services being provided on account. The customers were originally charged $5,000.
November		15		Write off customer accounts of $1,500 as uncollectible.

 

2. Record the following adjusting entries on December 31. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

1. Estimate that 10% of the balance of accounts receivable (after transactions in requirement 1) will not be collected.

2. Accrue interest on the note receivable of $10,000, which was accepted on October 1, 2021. Interest is due each September 30.

Answer 1

Date	Account Tittle	Debit	Credit
3-Jun	Account Receivable	$7,000.00
	Service Revenue		$7,000.00
	TO Record Servcie Revenue
8-Jun	Cash	$4,900.00
	Sales Discount	$100.00
	Account Receivable		$5,000.00
15-Nov	Allowance for Uncollectible Account	$1,500.00
	Account Receivable		$1,500.00
31-Dec	Bad Debt Expense (41500+7000-5000-1500)*10%	$4,200.00
	Allowance for Uncollectible Account		$4,200.00
31-Dec	Interest Receivable (10000*8%*3/12	$200.00
	Interest Revenue		$200.00

Answer 2

You need to - 700 ( currently in the allowance account) from 4,200 to get 3,500