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 $2,800 were written off as uncollectible. The company uses the allowance method.
		30		Loaned an officer of the company $33,000 and received a note requiring principal and interest at 8% to be paid on March 30, 2022.
May		30		Discounted the $33,000 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 $23,000. 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 $6,100 and accepted a $7,600 noninterest-bearing note with a discount rate of 9%. The $7,600 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 3% of the gross accounts receivable balance of $900,000. The allowance had a balance of $23,000 at the start of 2021.

Required:

1 & 2. 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.)

Answer 1

Answer:

1&2

Date	Particulars	Debit ($)	Credit ($)
March 17, 2021	Allowance for uncollectible accounts	2800
	Accounts receivable		2800
March 30, 2021	Notes receivable	33000
	Cash		33000
May 30, 2021	Interest receivable (33000*8%*2/12)	440
	Interest revenue		440
May 30, 2021	Cash (33000+33000*8%) -( (33000+33000*8%)*9/100*10/12)	32967
	Loss on sale of notes receeivable	473
	Interest receivable		440
	Notes receivable		33000
June 30, 2021	Accounts receivable	23000
	Sales revenue		23000
July 8, 2021	Cash	22310
	Sales discount (23000*3/100)	690
	Accounts receivable		23000
August 31, 2021	Notes receivable	7600
	Discount on notes receivable (7600*9%)*6/12		342
	Investments		6100
	Gain on sale of investments		1158
December 31, 2021	Bad debt expense (900000*3/100)-23000	4000
	Allowance for uncollectable		4000
December 31, 2021	Discount on notes receivable (7600*9%)*4/12	228
	Interest revenue		228