Learning Materials
Features
Discover
Chapter 8: Q12SE (page 469)
Question: McKale Corporation has a three-month, $18,000, 9% note receivable from L. Peters that was signed on June 1, 2018. Peters defaults on the loan on September 1.
Journalize the entry for McKale to record the default of the loan
Answer
Over 30 million students worldwide already upgrade their learning with 91影视!
All the tools & learning materials you need for study success - in one app.
Get started for free
On August 1, Taylor Company lent $80,000 to L. King on a 90-day, 5% note.
12. Journalize for Taylor Company the lending of the money on August 1.
13. Journalize the collection of the principal and interest at maturity. Specify the date. Round interest to the nearest dollar.
How does the percent-of-sales method compute bad debts expense?
What is the formula to compute interest on a note receivable?
Journalizing note receivable transactions
The following selected transactions occurred during 2018 and 2019 for Baltic Importers. The company ends its accounting year on September 30.
2018 | |
Jul. 1 | Loaned \(16,000 cash to Bud Shyne on a one-year, 8% note. |
Sep. 6 | Sold goods to Lawn Pro, receiving a 90-day, 6% note for \)11,000. Ignore Cost of Goods Sold. |
30 | Made a single entry to accrue interest revenue on both notes. |
? | Collected the maturity value of the Lawn Pro note. |
2019 | |
Jul. 1 | Collected the maturity value of the Shyne note. |
Journalize all required entries. Make sure to determine the missing maturity date. Round to the nearest dollar
Accounting for uncollectible accounts using the allowance (percent of-sales) and direct write-off methods and reporting receivables on thebalance sheet
On August 31, 2018, Forget-Me-Not Floral Supply had a \(140,000 debit balance inAccounts Receivable and a \)5,600 credit balance in Allowance for Bad Debts. DuringSeptember, Forget-Me-Not made the following transactions:
鈥� Sales on account, \(530,000. Ignore Cost of Goods Sold.
鈥� Collections on account, \)573,000.
鈥� Write-offs of uncollectible receivables, $6,000.
Requirements
1. Journalize all September entries using the allowance method. Bad debts expense wasestimated at 2% of credit sales. Show all September activity in Accounts Receivable,Allowance for Bad Debts, and Bad Debts Expense (post to these T-accounts).
2. Using the same facts, assume that Forget-Me-Not used the direct write-off methodto account for uncollectible receivables. Journalize all September entries using thedirect write-off method. Post to Accounts Receivable and Bad Debts Expense, andshow their balances at September 30, 2018.
3. What amount of Bad Debts Expense would Forget-Me-Not report on its Septemberincome statement under each of the two methods? Which amount better
matches expense with revenue? Give your reason.
4. What amount of net accounts receivable would Forget-Me-Not report on its September
30, 2018, balance sheet under each of the two methods? Which amount ismore realistic? Give your reason
What do you think about this solution?
We value your feedback to improve our textbook solutions.
Explanations 
Textbooks 
Flashcards 
91影视 AI 
Notes 
Study Plans 
Study Sets 
Find a degree 
Magazine