Accounting for uncollectible accounts (aging of accounts method), card sales, notes receivable, and accrued interest revenue [20-30 min]
Relaxing Recliner Chairs completed the following selected transactions:
2011 | |||
Jul 1 | Sold inventory to Great - Mart, receiving a $45,000, nine-month, 12% note. Ignore cost of goods sold. | ||
Oct 31 | Recorded credit- and debit-card sales for the period of $21,000. | ||
Nov 3 | Card processor drafted company’s checking account for processing fee of $410. | ||
Dec 31 | Made an adjusting entry to accrue interest on the Great - Mart note. | ||
31 | Made an adjusting entry to record uncollectible account expense based on an aging of accounts receivable. The aging schedule shows that $15,200 of accounts receivable will not be collected. Prior to this adjustment, the credit balance in Allowance for uncollectible accounts is $11,600. | ||
2012 | |||
Apr 1 | Collected the maturity value of the Great - Mart note. | ||
Jun 23 | Sold merchandise to Ambiance, Corp., receiving a 60-day, 9% note for $13,000. Ignore cost of goods sold. | ||
Aug 22 | Ambiance, Corp., dishonored its note (failed to pay) at maturity; we converted the maturity value of the note to an account receivable. | ||
Nov 16 | Loaned $21,000 cash to Creed, Inc., receiving a 90-day, 8% note. | ||
Dec 5 | Collected in full on account from Ambiance, Corp. | ||
31 | Accrued the interest on the Creed, Inc., note. | ||
Requirement
1. Record the transactions in the journal of Relaxing Recliner Chairs. Explanations are not required. (For notes stated in days, use a 360-day year. Round to the nearest dollar.)
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