Elburn Supply Co. has the following transactions related to notes receivable during the last 2 months of 2019. the company does not make entries to accrue interest except at December 31.
| Nov. 1 | Loaned $30,000 cash to Manny Lopez on a 12 month, 10% note. |
| Dec. 11 | Sold goods to Ralph Kremer, Inc., receiving a $6,750, 90-day, 8% note |
| 16 | Received a $4,000, 180 day, 9% note in exchange for Joe Fernetti's outstanding accounts receivable. |
| 31 | Accrued interest revenue on all notes receivable. |
Instructions
- Journalize the transactions for Elburn Supply Co.
- Record the collection of the Lopez note at its maturity in 2020.
At December 31, 2019, Finzelberg Company had a credit balance of $15,000 in Allowance for Doubtful Accounts. During 2020, Finzelberg wrote off accounts totaling $11,000. One of those accounts ($1,800) was later collected. At December 31, 2020, an aging schedule indicated that the balance in Allowance for Doubtful Accounts should be $19,000.
Instructions
Prepare journal entries to record the 2020 transactions of Finzelberg Company.
On December 31, 2019, Ling Co. estimated that 2% of its net sales of $450,000 will become uncollectible. the company recorded this amount as an addition to Allowance for Doubtful Accounts. On May 11, 2020, Ling Co. determined that the Jeff Shoemaker account was uncollectible and wrote off $1,100. On June 12, 2020, Shoemaker paid the amount previously written off.
Instructions
Prepare the journal entries on December 31, 2019, May 11, 2020, and June 12, 2020.
Presented below are two independent situations.
- On March 3, Kitselman Appliances sells $650,000 of its receivables to Ervay Factors Inc. Ervay Factors assesses a finance charge of 3% of the amount of receivables sold. Prepare the entry on Kitselman Appliances books to record the sale of the receivables.
- On May 10, Fillmore Company sold merchandise for $3,000 and accepted the custoemr's America Bank MasterCard. America Bank charges a 4% service charge for credit card sales. Prepare the entry on Fillmore Company's books to record the sale of merchandise.
Presented below are two independent situations.
- On April 2, Jennifer Eiston uses her JCPenney Company credit card to purchase merchandise from a JCPenney store for $1,500. On May 1, Elston is is billed for the $1,500 amount due. Eiston pays $500 on the balance due on May 3. Eiston received a bill dated June 1 for the amount due, including interest at 1.0% per month on the unpaid balance as of May3. Prepare the entries on JCPenney Co.'s books related to the transactions that occurred on April 2, May 3, and June 1.
- on July 4, Spangler's Restaurant accepts a Visa card for a $200 dinner bill. Visa charges a 2% service fee. Prepare the entry on Spangler's books related to this transactions.
Colaw Stores accepts both its own and national credit cards. During the year, the following selected summary transactions occurred.
| Jan. 15 | Made Colaw credit card sales totaling $18,000. (There were no balance prior to January 15.) |
| 20 | Made Visa credit card sales (service charge fee 2%) totaling $4,500. |
| Feb. 10 | Collected $10,000 on Colaw credit card sales |
| 15 | Added finance charges of 1.5% to Colaw credit card account balances. |
Instructions
Journalize the transactions for Colaw Stores
Vandiver Company had the following select transactions
| Apr. 1, 2019 | Accepted Goodwin Company's 12-month, 12% note in settlement of a $30,000 account receivable. |
| July 1, 2019 | Loaned $25,000 cash to Thomas Slocombe on a 9-month, 10% note. |
| Dec. 31, 2019 | Accrued interest on all notes receivable. |
| Apr. 1, 2020 | Received principal plus interest on the Goodwin note. |
| Apr. 1, 2020 | thomas Slocombe dishonored its note; Vandiver expects it will eventually collect. |
Instructions
Prepare journal entries to record the transactions. Vandiver prepares adjusting entries once a year on December 31.
Kerwick Company had accounts receivable of $100,000 on January 1, 2020. the only transactions that affected accounts receivable during 2020 were net credit sales of $1,000,000, cash collections of $920,000, and accounts written off of $30,000.
Instructions
- Compute the ending balance of accounts receivable.
- Compute the accounts receivable turnover for 2020.
- Compute the average collection period in days.
On May 2, McLain Company lends $9,000 to Chang, Inc., issuing a 6-month, 9% not. at the maturity date, November 2, Chang indicates that it cannot pay.
Instructions
- Prepare the entry to record the issuance of the note.
- Prepare the entry to record the dishonor of the note, assuming that McLain Company expects collection will occur.
- Prepare the entry to record the dishonor of the note, assuming that McLain Company does not expect collection in the future.
Menge Company has accounts receivable of $93,100 at March 31. Credit terms are 2/10, n/30. At March 31, Allowance for Doubtful Accounts has a credit balance of $1,200 prior to adjustment. The company uses the percentage-of-receivables basis for estimating noncollectable accounts. The company's estimate of bad debts is shown below.
Instructions
- Determine the total estimated uncollectibles
- Prepare the adjusting entry at March 31 to record bad debt expense.