Question

The following trial balance was prepared for Tile, Etc., Inc. on December 31, 2017, after the closing entries were posted:

Account Title
Cash	$	110,000
Accounts receivable		125,000
Allowance for doubtful accounts	$	18,000
Inventory		425,000
Accounts payable		95,000
Common stock		450,000
Retained earnings		97,000

Tile, Etc. had the following transactions in 2018:

1. Purchased merchandise on account for $580,000.
2. Sold merchandise that cost $420,000 for $890,000 on account.
3. Sold for $245,000 cash merchandise that had cost $160,000.
4. Sold merchandise for $190,000 to credit card customers. The merchandise had cost $96,000. The credit card company charges a 4 percent fee.
5. Collected $620,000 cash from accounts receivable.
6. Paid $610,000 cash on accounts payable.
7. Paid $145,000 cash for selling and administrative expenses.
8. Collected cash for the full amount due from the credit card company (see item 4).
9. Loaned $60,000 to J. Parks. The note had an 8 percent interest rate and a one-year term to maturity.
10. Wrote off $7,500 of accounts as uncollectible.
11. Made the following adjusting entries:
    (a) Recorded uncollectible accounts expense estimated at 1 percent of sales on account.
    (b) Recorded seven months of accrued interest on the note at December 31, 2018 (see item 9).

Required

1. how to do part 11b

Answer 1

Event	General Journal	Debit	Credit
		$	$
01	Merchandise Inventory	580,000
	Accounts Payable		580,000
02	Accounts Receivables	890,000
	Sales Revenue		890,000
	Cost of Goods Sold	420,000
	Merchandise Inventory		420,000
03	Cash	245,000
	Sales Revenue		245,000
	Cost of Goods Sold	160,000
	Merchandise Inventory		160,000
04	Accounts Receivable	190,000
	Sales Revenue		190,000
	Cost of Goods Sold	96,000
	Merchandise Inventory		96,000
05	Cash	620,000
	Accounts Receivable		620,000
06	Accounts Payable	610,000
	Cash		610,000
07	Selling and Administrative Expense	145,000
	Cash		145,000
08	Cash	182,400
	Credit Card Expense ( $ 190,000 x 4%)	7,600
	Accounts Receivable		190,000
09	Notes Receivable	60,000
	Cash		60,000
10	Allowance for Doubtful Accounts	7,500
	Accounts Receivable		7,500
11 a.	Uncollectible Accounts Expense $ ( 890,000 + 190,000) x 1 %	10,800
	Allowance for Doubtful Accounts		10,800
b.	Interest Receivable ( $ 60,000 x 8% x 7/12)	2,800
	Interest Revenue		2,800

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