1. Prepare general journal entries for the following transactions for the current year: April 25 Sold $3,500 of merchandise to Phillip Corporation receiving a 9%, 60-day, $3,500 note receivable (the merchandise cost $2,000) June 24 The note of Phillip Corporation was dishonored. Date Description Post Ref Debit Credit
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- On June 1, Phillips Corporation sold, with recourse, a note receivable from a customer to a bank. The note has a face value of 15,000 and a maturity value (principal plus interest) of 15,400. The discount is calculated to be 385, and the accrued interest income is 100. The recourse liability is estimated to be 1,000. Prepare the journal entry of Phillips to record the sale of the note receivable.Casebolt Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31: a. Journalize the write-offs under the direct write-off method. b. Journalize the write-offs under the allowance method. Also, journalize the adjusting entry for uncollectible accounts. The company recorded 5,250,000 of credit sales during the year. Based on past history and industry averages, % of credit sales are expected to be uncollectible. c. How much higher (lower) would Casebolt Companys net income have been under the direct write-off method than under the allowance method?Serene Company purchases fountains for its inventory from Kirkland Inc. The following transactions take place during the current year. A. On July 3, the company purchases thirty fountains for $1,200 per fountain, on credit. Terms of the purchase are 2/10, n/30, invoice dated July 3. B. On August 3, Serene does not pay the amount due and renegotiates with Kirkland. Kirkland agrees to convert the debt owed into a short-term note, with an 8% annual interest rate, payable in two months from August 3. C. On October 3, Serene Company pays its account in full. Record the journal entries to recognize the initial purchase, the conversion, and the payment.
- Resin Milling issued a $390,500 note on January 1, 2018 to a customer in exchange for merchandise. The merchandise had a cost to Resin Milling of $170,000. The terms of the note are 24-month maturity date on December 31, 2019 at a 5% annual interest rate. The customer does not pay on its account and dishonors the note. Record the journal entries for Resin Milling for the following transactions. A. Initial sale on January 1, 2018 B. Dishonored note entry on January 1, 2020, assuming interest has not been recognized before note maturityOn December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to McLaughlin Company for cash. McLaughlin Company charges a 750 service fee, advances 85% of Jordans accounts receivable, and charges an annual interest rate of 9% on any outstanding loan balance. Prepare the related journal entries for Jordan.UNCOLLECTIBLE ACCOUNTSPERCENTAGE OF SALES AND PERCENTAGE OF RECEIVABLES At the completion of the current fiscal year ending December 31, the balance of Accounts Receivable for Andersons Greeting Cards was 180,000. Credit sales for the year were 1,950,000. REQUIRED Make the necessary adjusting entry in general journal form under each of the following assumptions. Show calculations for the amount of each adjustment and the resulting net realizable value. 1. Allowance for Doubtful Accounts has a credit balance of 2,600. (a) The percentage of sales method is used and bad debt expense is estimated to be 1.5% of credit sales. (b) The percentage of receivables method is used and an analysis of the accounts produces an estimate of 30,250 in uncollectible accounts. 2. Allowance for Doubtful Accounts has a debit balance of 1,900. (a) The percentage of sales method is used and bad debt expense is estimated to be 1.0% of credit sales. (b) The percentage of receivables method is used and an analysis of the accounts produces an estimate of 20,500 in uncollectible accounts.
- Window World extended credit to customer Nile Jenkins in the amount of $130,900 for his purchase of window treatments on April 2. Terms of the sale are 2/60, n/150. The cost of the purchase to Window World is $56,200. On September 4, Window World determined that Nile Jenkinss account was uncollectible and wrote off the debt. On December 3, Mr. Jenkins unexpectedly paid in full on his account. Record each Window World transaction with Nile Jenkins. In order to demonstrate the write-off and then subsequent collection of an account receivable, assume in this example that Window World rarely extends credit directly, so this transaction is permitted to use the direct write-off method. Remember, however, that in most cases the direct write-off method is not allowed.Entries for Receipt and Dishonor of Note Receivable Journalize the following transactions of Trapper Jon’s Productions. Assume 360 days in a year. If an amount box does not require an entry, leave it blank. June 23 Received a $48,000, 90-day, 8% note dated June 23 from Radon Express Co. on account. Sept. 21 The note is dishonored by Radon Express Co. Oct. 21 Received the amount due on the dishonored note plus interest for 30 days at 10% on the total amount charged to Radon Express Co. on September 21. June 23 Notes Receivable Accounts Receivable-Radon Express Co. Sept. 21 Accounts Receivable-Radon Express Co. Notes Receivable Interest Revenue Oct. 21 Cash Accounts Receivable-Radon Express Co. Interest RevenueThe following items were selected from among the transactions completed by Pioneer Co. during the current year: Mar. 1. Purchased merchandise on account from Galston Co., $360,000, terms n/30. Mar. 31. Issued a 30-day, 5% note for $360,000 to Galston Co., on account. Apr. 30. Paid Galston Co. the amount owed on the note of March 31. June 1. Borrowed $180,000 from Pilati Bank, issuing a 45-day, 4% note. July 1. Purchased tools by issuing a $210,000, 60-day note to Zegna Co., which discounted the note at the rate of 7%. July 16. Paid Pilati Bank the interest due on the note of June 1 and renewed the loan by issuing a new 30-day, 6.5% note for $180,000. (Journalize both the debit and credit to the notes payable account.) Aug. 15. Paid Pilati Bank the amount due on the note of July 16. Aug. 30. Paid Zegna Co. the amount due on the note of July 1. Dec. 1. Purchased office equipment from Taylor Co. for $500,000, paying $120,000 and issuing a series of ten 6% notes for $38,000 each, coming…
- The following items were selected from among the transactions completed by Sherwood Co. during the current year: Mar. Apr. Jun. Jul. Aug. Dec. 1 Purchased merchandise on account from Kirkwood Co., $396,000, terms n/30. 31 Issued a 30-day, 4% note for $396,000 to Kirkwood Co., on account. 30 Paid Kirkwood Co. the amount owed on the note of March 31. 1 Borrowed $174,000 from Triple Creek Bank, issuing a 45-day, 4% note. 1 Purchased tools by issuing a $258,000, 60-day note to Poulin Co., which discounted the note at the rate of 7%. 16 15 30 1 22 31 Paid Triple Creek Bank the interest due on the note of June 1 and renewed the loan by issuing a new 30-day, 6.5% note for $174,000. (Journalize both the debit and credit to the notes payable account.) Paid Triple Creek Bank the amount due on the note of July 16. Paid Poulin Co. the amount due on the note of July 1. Purchased equipment from Greenwood Co. for $400,000, paying $114,000 cash and issuing a series of ten 4% notes for $28,600 each,…The following items were selected from among the transactions completed by Sherwood Co. during the current year: Mar. 1 Purchased merchandise on account from Kirkwood Co., $396,000, terms n/30. 31 Issued a 30-day, 4% note for $396,000 to Kirkwood Co., on account. Apr. 30 Paid Kirkwood Co. the amount owed on the note of March 31. Jun. 1 Borrowed $174,000 from Triple Creek Bank, issuing a 45-day, 4% note. Jul. 1 Purchased tools by issuing a $258,000, 60-day note to Poulin Co., which discounted the note at the rate of 7%. 16 Paid Triple Creek Bank the interest due on the note of June 1 and renewed the loan by issuing a new 30-day, 6.5% note for $174,000. (Journalize both the debit and credit to the notes payable account.) Aug. 15 Paid Triple Creek Bank the amount due on the note of July 16. 30 Paid Poulin Co. the amount due on the note of July 1. Dec. 1 Purchased equipment from Greenwood Co. for $400,000, paying $114,000 cash and issuing a series of ten 4% notes…The following items were selected from among the transactions completed by Sherwood Co. during the current year: Mar. 1 Purchased merchandise on account from Kirkwood Co., $396,000, terms n/30. 31 Issued a 30-day, 4% note for $396,000 to Kirkwood Co., on account. Apr. 30 Paid Kirkwood Co. the amount owed on the note of March 31. Jun. 1 Borrowed $174,000 from Triple Creek Bank, issuing a 45-day, 4% note. Jul. 1 Purchased tools by issuing a $258,000, 60-day note to Poulin Co., which discounted the note at the rate of 7%. 16 Paid Triple Creek Bank the interest due on the note of June 1 and renewed the loan by issuing a new 30-day, 6.5% note for $174,000. (Journalize both the debit and credit to the notes payable account.) Aug. 15 Paid Triple Creek Bank the amount due on the note of July 16. 30 Paid Poulin Co. the amount due on the note of July 1. Dec. 1 Purchased equipment from Greenwood Co. for $400,000, paying $114,000 cash and issuing a series of ten 4% notes…