Question

Journal Entries for Accounts and Notes Receivable Lancaster, Inc., began business on January 1. Certain transactions for the year follow: Jun.8 Received a $15,000, 60 day, eight percent note on account from R. Elliot. Aug.7 Received payment from R. Elliot on her note (principal plus interest). Sep.1 Received a $18,000, 120 day, nine percent note from B. Shore Company on account. Dec.16 Received a $14,400, 45 day, ten percent note from C. Judd on account. Dec.30 B. Shore Company failed to pay its note. Dec.31 Wrote off B. Shore's account as uncollectible. Lancaster, Inc., uses the allowance method of providing for credit losses. Dec.31 Recorded expected credit losses for the year by an adjusting entry. Accounts written off during this first year have created a debit balance in the Allowance for Doubtful Accounts of $22,600. An analysis of aged receivables indicates that the desired balance of the allowance account should be $19,500. Dec.31 Made the appropriate adjusting entries for interest. Required Record the foregoing transactions and adjustments in general journal form. (Use 360 days for all interest calculations. Round all Interest Income calculations to the nearest dollar.)

Answer 1

Solution-

JOURNAL ENTRY

Date	Accounts Title and Explanations	Debit($)	Credit($)
June 8	Notes Receivable-R.Elliot	15000
	To Accounts Receivable-R.Elliot		15000
	(Record, received a 60-day 8% note on account)
Aug 7	Cash	15200
	To Interest Income [ (15000*8%) * 60/360]		200
	To Notes Receivable-R.Elliot		15000
	(Record , receipt of principal plus interest from R.Elliot)
Sep 1	Notes Receivable-B.shore company	18000
	To Accounts Receivable-B.Shore company		18000
	(Record, received a 120-day 9% note on account)
Dec 16	Notes Receivable -C.Judd	14400
	To Accounts Receivable -C.Judd		14400
	(Record, received a 45-day 10% note on account)
Dec 30	Accounts Receivable-B.Shore Company	18540
	To Interest Income [(18000*9%) *12/360]		540
	To Note Receivable-B.Shore Company		18000
	(Record , dishonoring of B.Shore Company's note)
Dec 31	Allowance for doubtful Accounts	18540
	To Accounts Receivable-B.Shore Company		18540
	(Record , write-off B.Shore's account)
Dec 31	Bad debts expense (22600+19500)	42100
	To Allowance for doubtful Accounts		42100
	(Record , allowance for uncollectible accounts)
Dec 31	Interest Receivable [(14400*10%) * 15/360]	60
	To Interest Income		60
	(Record, accrue interest income on december 16 note)