Question

Journal Entries for Accounts and Notes Receivable
Armstrong, Inc., began business on January 1. Several transactions for the year follow:

May 2	Received a $16,400, 60 day, ten percent note on account from the Holt Company.
Jul.1	Received payment from Holt for its note plus interest.
Jul.1	Received a $29,000, 120 day, ten percent note from B. Rich Company on account.
Oct.30	B. Rich failed to pay its note.
Dec.9	Wrote off B. Rich's account as uncollectible. Armstrong, Inc., uses the allowance method
	of providing for credit losses.
Dec.11	Received a $23,000, 90 day, nine percent note from W. Maling on account.
Dec.31	Recorded expected credit losses for the year by an adjusting entry. The allowance for
	doubtful accounts has a debit balance of $30,300 as a result of accounts written off during
	this first year. An analysis of aged accounts receivables indicates that the desired balance
	of the allowance account is $7,800
Dec.31	Made the appropriate adjusting entries for interest.

Required
Record the foregoing transactions and adjustments in general journal form. (Use 360 days for all interest calculations. Round all Interest Income calculations to the nearest dollar.)

General Journal
Date	Description	Debit	Credit
May 2	Notes Receivable-Holt Company	16,400	0
	Accounts Receivable - Holt Company	0	16,400
	Received a 60-day, 10 percent note in payment of account.
Jul.1	Cash	?	0
	Interest Income	0	?
	Notes Receivable-Holt Company	0	?
	To record collection of principal and interest from Holt Company.
Jul.1	Notes Receivable-B. Rich Company	?	0
	Accounts Receivable-B. Rich Company	0	?
	Received a 120-day, 10 percent note in payment of account.
Oct.30	Accounts Receivable-B. Rich Company	?	0
	Interest Income	0	?
	Notes Receivable-B. Rich Company	0	?
	To record dishonoring of note by B. Rich Company.
Dec.9	Allowance for Doubtful Accounts	?	0
	Accounts Receivable-B. Rich Company	0	?
	Wrote off B. Rich's account.
Dec.11	Notes Receivable-W. Maling	?	0
	Accounts Receivable-W. Maling	0	?
	Received a 90-day, 9 percent note on account.
Dec.31	Bad Debts Expense	?	0
	Allowance for Doubtful Accounts	0	?
	To record allowance for doubtful accounts.
Dec.31	Interest Receivable	?	0
	Interest Income	0	?
	To accrue interest income on December 11 note.

Answer 1

Journal entries:
Date	Accounts title and explanations				Debit $	Credit $
2-May	Notes receivable Account Dr.				16400
	Accounts receivable					16400
1-Jul	Cash Account Dr.				16673
	Notes receivable Account					16400
	Interest revenue (16400*10%*60/360)					273
1-Jul	Notes receivable Account Dr.				29000
	Accounts receivable					29000
30-Oct	Accounts reeivable Account Dr.				29667
	Notes receivable Account					29000
	Interest revenue (29000*10%*120/360)					967
9-Dec	Allowance for doubtful account Dr.				29667
	Accounts receivable					29667
11-Dec	Notes receivable Account Dr.				23000
	Accounts receivable					23000
31-Dec	Bad debt expense Account Dr.				38100
	Allowance for doubtful account (30300+7800)					38100
31-Dec	Interest receivable Account Dr. (23000*9%*20/360)				115
	Interest revenue					115