In: Accounting
Journal Entries for Accounts and Notes
Receivable
Armstrong, Inc., began business on January 1. Several transactions
for the year follow:
May 2 | Received a $18,800, 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 $31,000, 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 $25,000, 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 $32,300 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 $9,800 | |
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 | |||
Received a 60-day, 10 percent note in payment of account. | |||
Jul.1 | |||
Notes Receivable-Holt Company | |||
To record collection of principal and interest from Holt Company. | |||
Jul.1 | |||
Received a 120-day, 10 percent note in payment of account. | |||
Oct.30 | |||
Notes Receivable-B. Rich Company | |||
To record dishonoring of note by B. Rich Company. | |||
Dec.9 | |||
Wrote off B. Rich's account. | |||
Dec.11 | |||
Received a 90-day, 9 percent note on account. | |||
Dec.31 | |||
To record allowance for doubtful accounts. | |||
Dec.31 | |||
To accrue interest income on December 11 note. |