Question

Weldon Corporation’s fiscal year ends December 31. The following is a list of transactions involving receivables that occurred during 2021:

Mar.		17		Accounts receivable of $2,200 were written off as uncollectible. The company uses the allowance method.
		30		Loaned an officer of the company $27,000 and received a note requiring principal and interest at 8% to be paid on March 30, 2022.
May		30		Discounted the $27,000 note at a local bank. The bank’s discount rate is 9%. The note was discounted without recourse and the sale criteria are met.
June		30		Sold merchandise to the Blankenship Company for $17,000. Terms of the sale are 3/10, 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 $5,500 and accepted a $7,000 noninterest-bearing note with a discount rate of 9%. The $7,000 payment is due on February 28, 2022. The stock has no ready market value.
Dec.		31		Weldon estimates that the allowance for uncollectible accounts should have a balance in it at year-end equal to 2% of the gross accounts receivable balance of $840,000. The allowance had a balance of $17,000 at the start of 2021.

Required:

Prepare journal entries for each of the above transactions and additional year-end adjusting entries indicated. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations and round your final answers to nearest whole dollar.)

4. Record the cash received on the discounted note.

6. The Blankenship Company paid its account in full.

7. Sold stock with a book value of $5,500 and accepted a $7,000 noninterest-bearing note with a discount rate of 9% due on February 28, 2022.

8. To record the accrual of interest earned on note receivable.

9. To record the accrual of bad debt expense.

Answer 1

Date	Account Titles and Explanation	Debit	Credit
Mar.17	Allowance for uncollectible accounts	$   2,200.00
	Accounts receivable		$   2,200.00
Mar.30	Note receivable	$ 27,000.00
	Cash		$ 27,000.00
30-May	Interest receivable (($27,000 x 8% x 2/12)	$      360.00
	Interest Revenue		$      360.00
30-May	Cash	$ 26,973.00			Face amount	$                      27,000.00
	Loss on sale of note receivable	$      387.00			Interest receivable (($27,000 x 8% )	$                        2,160.00
	Interest receivable (($27,000 x 8% x 2/12)		$      360.00		Maturity value	$                      29,160.00
	Note receivable		$ 27,000.00		Discount ($27,4360 x 9% x 10/12)	$                        2,187.00
	Record the cash received on the discounted note.				Cash proceeds	$                      26,973.00
30-Jun	Accounts receivable	$ 17,000.00
	sales		$ 17,000.00
8-Jul	Cash ($17,000 x 97%)	$ 16,490.00
	Sales discounts ($17,000 x 3%)	$      510.00
	Accounts receivable		$ 17,000.00
	(The Blankenship Company paid its account in full)
31-Aug	Notes receivable	$   7,000.00
	Discount on note receivable ($7,000 x 9%x 6/12		$      315.00
	Investments		$   5,500.00
	Gain on sale of Investments		$   1,185.00
	(Sold stock with a book value of $5,500 and accepted a $7,000 noninterest-bearing note with a discount rate of 9% due on February 28, 2022
31-Dec	Bad debt expense (840,000 x2%)	$ 16,800.00
	Allowance for uncollectible accounts		$ 16,800.00
	To record the accrual of bad debt expense
	Adjusting Entries
31-Dec	Discount on note receivable	$      210.00
	Interest revenue ($7,000 x 9% x 4/12)		$      210.00
	To record the accrual of interest earned on note receivable.