Question

Weldon Corporation’s fiscal year ends December 31. The following is a list of transactions involving receivables that occurred during 2018:

Mar. 17 Accounts receivable of $2,100 were written off as uncollectible. The company uses the allowance method. 30 Loaned an officer of the company $24,000 and received a note requiring principal and interest at 5% to be paid on March 30, 2019.

May 30 Discounted the $24,000 note at a local bank. The bank’s discount rate is 6%. The note was discounted without recourse and the sale criteria are met.

June 30 Sold merchandise to the Blankenship Company for $16,000. Terms of the sale are 2/10, n/30. Weldon uses the gross method to account for cash discounts.

July 8 The Blankenship Company paid its account in full.

Aug. 31 Sold stock in a nonpublic company with a book value of $5,400 and accepted a $6,400 noninterest-bearing note with a discount rate of 6%. The $6,400 payment is due on February 28, 2019. The stock has no ready market value.

Dec. 31 Bad debt expense is estimated to be 2% of credit sales for the year. Credit sales for 2018 were $740,000. Required:

1 & 2. Prepare journal entries for each of the above transactions and additional year-end adjusting entries indicated

0 Date General Journal Debit redit March 17 2018 Allowance for uncollectible accounts 2100 Accounts eceivable 2,100 March 30 2018 Note receivable 24,000 Cash 24,000 May 30, 2018 Interest receivable Interest revenue May 30, 2018 Cash 1,440 Note receivable 24,000 June 30, 2018Accounts receivable Sales revenue July 08, 2018 Cash Sales discounts Acco unts receivable August 31 2018 Gain on sale of investments December 31 2018 Bad debt expense Allowance for uncollectible accounts December 31 2018 Discount on note receivable

Answer 1

Weldon Date Account Title Debit ($) Credit (S) March 17, 18 Allowance for uncollectible accounts Accounts Receivable 2100 2100 March 30, 18 Notes receivable 24000 Cash 24000 May 30, 18 Interest receivable 200 Interest revenue ( 24000 * 5 % * 2/12) 200 Maturity Value-24000 + [ 24000 * 5 %-$ 25200 Discount-25200 * 6 % * 10 / 12-1260 May 30, 18 Cash 23940 Loss on sale of note receivable (balancing figure260 Interest receivable Notes receivable 200 Cash proceeds 25200 1260 $23940 24000 Jun-30 Accounts Receivable 16000 Sales revenue 16000 Jul-08 Cash 15680 320 Sales discount ( 16000 * 2 % Accounts Receivable 16000 Aug. 31 Notes receivable (face amount) Discount on Notes receivable ( balancing figure) Investments(book value) Gain on sale (6216- 5400) 6400 6400-PV" FWF ( 0.5 months, 6 % ) 184 6400 PV1.0296 5400 PV 6216 816 Gain 6216 5400 816 Feb. 28 to Aug. 31-6 months Dec. 31 Bad debt exp.( 740000 * 2 % ) Allowance for uncollectible accounts 14800 14800 Dec. 31 124 Discount on notes receivable Interest revenue ( 6216 * 6 % * 4/12 124