Question

Weldon Corporation’s fiscal year ends December 31. The following is a list of transactions involving receivables that occurred during 2018:

Mar.		17		Accounts receivable of $2,000 were written off as uncollectible. The company uses the allowance method.
		30		Loaned an officer of the company $24,000 and received a note requiring principal and interest at 8% to be paid on March 30, 2019.
May		30		Discounted the $24,000 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 $15,000. Terms of the sale are 4/10, 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 $5,300 and accepted a $6,400 noninterest-bearing note with a discount rate of 9%. The $6,400 payment is due on February 28, 2019. The stock has no ready market value.
Dec.		31		Bad debt expense is estimated to be 3% of credit sales for the year. Credit sales for 2018 were $730,000.

Required:

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

Answer 1

Prepare journal entries:-

Note	Date	Account title and explanation	Debit (in$)	Credit (in$)
1.	March 17,2018	Allowance for uncollectible accounting	2000
		To Accounts receivable		2000
		(To record account written off)
2.	March 30,2018	Note receivable	24000
		To cash		24000
		(To record amount loaned to officer)
3.	May 30,2018	Interest receivable (24000*8%*2/12)	320
		To interest revenue		320
4.	May 30,2018	cash	23976
		loss on sale of note receivables (B.f)	344
		To interest revenue		320
		To notes receivable		24000
5.	June 30,2018	Accounts receivable	15000
		To sales revenue		15000
		(Sales made on account)
6.	July,8,2018	cash	14400
		Sales discounts (15000*.04)	600
		To account receivables		15000
		( Amount collected within discount period)
7.	Aug.31,2018	Notes receivable	6400
		To discount on note receivables (6400*9%*6/12)		288
		To investments		5300
		To gain on sale of investment		812
8.	Dec.31,2018	Bad debt expenses	21900
		To Allowance for uncollectible accounting		21900
9.	Dec.31,2018	interest payable	183
		To interest revenue (5300+812) = (6112*9%*4/12)		183

Working notes:-

Face amount = 24000

Add:- interest to maturity = 1920 (24000*8%)

Maturity value. = 25920

Deduct discount to calculate cash proceeds

Maturity value- discount = 25920-1944=$23976