Question

Prepare general journal entries for the following transactions of Norman Company, assuming they use the allowance method to account for uncollectible accounts. Apr 01 Sold $3,500 of merchandise to Lance Co., receiving an 8%, 90-day, $3,500 note. 15 Wrote off $1,500 owed by Guy Co. from a previous period sale. 30 Received a $5,000, 6%, 30-day note receivable from James Co. as settlement for its $5,000 account receivable. May 30 The note received from James on April 30 was collected in full. Jun 30 Lance Co. was unable to pay the note on the due date. Jul 15 Guy Co. paid $1,000 of the amount written off on April 15.

Answer 1

Solution:

Date	General Journal	Debit	Credit
Apr.01	Notes Receivable	$3,500
	Sales		$3,500
Apr.15	Allowance for Uncollectible Account	$1,500
	Accounts Receivable		$1,500
Apr.30	Notes Receivable	$5,000
	Accounts Receivable		$5,000
May.30	Cash	$5,025
	Interest Income ($5,000*6%*30/360)		$25
	Notes Receivable		$5,000
June.30	Accounts Receivable	$3,570
	Interest Income (3500*8%*90/360)		$70
	Notes Receivable		$3,500
July.15 (a)	Accounts Receivable	$1,000
	Allowance for Uncollectible Account		$1,000
July.15 (b)	Cash	$1,000
	Accounts Receivable		$1,000

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