On June 3, Bolton Company sold to Arquette Company merchandise having a sale price of $2,000 with terms of 2/10, n/60, f.o.b. shipping point. On June 12, the company received a check for the balance due from Arquette Company. Prepare the journal entries o
June 3
Accounts Receivable 2,000
Sales 2,000
June 12
Cash ($2,000 x 98%) 1,960
Sales Discounts 40
Accounts Receivable 2,000
On June 3, Bolton Company sold to Arquette Company merchandise having a sale price of $2,000 with terms of 2/10, n/60, f.o.b. shipping point. On June 12, the company received a check for the balance due from Arquette Company. Prepare the journal entries o
June 3
Accounts Receivable 1,960
Sales 1,960
June 12
Cash 1,960
Accounts Receivable 1,960
On June 3, Bolton Company sold to Arquette Company merchandise having a sale price of $2,000 with terms of 2/10, n/60, f.o.b. shipping point. Prepare the journal entries on Bolton Company books to record the sale assuming Bolton records sales using the ne
June 3
Accounts Receivable 1,960
Sales 1,960
June 29
Cash 2,000
Accounts Receivable 1,960
Sales Discounts Forfeited 40
On June 3, Arnold Company sold to Chester Company merchandise having a sale price of $3,000 with terms of 2/10, n/60, f.o.b. shipping point. An invoice totaling $90, terms n/30, was received by Chester on June 8 from John Booth Transport Service for the f
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Sales and receivables are entered at gross selling price.
June 3
Accounts Receivable�Chester 3,000
Sales Revenue 3,000
June 12
Cash 2,940
Sales Discounts ($3,000 X 2%) 60
Accounts Receivable�Chester 3,000
Sales and receivables are entered at net of cash discounts.
June 3
Accounts Receivable�Chester 2,940
Sales Revenue ($3,000 X 98%) 2,940
June 12
Cash 2,940
Accounts Receivable�Chester 2,940
Prepare the journal entry under basis 2, assuming that Chester Company did not remit payment until July 29.
July 29
Cash 3,000
Accounts Receivable�Chester 2,940
Sales Discounts Forfeited 60
Gonzalez Company estimates that about 1% of net credit sales become uncollectible. If net credit sales are $800,000 for the year, it records bad debt expense as follows. (Percent of sale method)
Bad Debt Expense 8,000
Allowance for Doubtful Accounts 8,000
Rodriguez Company reports the following financial information before adjustments.
A/R 25000d
Allowance Doubtful Accounts 500c
Sales 262500d
Sale Returns and allowances 12500c
Prepare the journal entry to record Bad Debt Expense assuming Rodriguez Company
(a) % of Sales: 0.3% of net sales is just 250*3=750 (net sales: 262500-12500=250,000)
Record: Bad Debt Expense 750
Allowance 750
Allowance Balance=500+750
Net Receivables=25,000-500-750
Bad Debt Expense=750
(b) 8% of A/R: the current balance is 25,000, 8%
The financial vice president of Brown Furniture authorizes a write-off of the $1,000 balance owed by Randall Co. on March 1. The entry to record the write-off is:
Allowance for Doubtful Accounts 1,000
Accounts Receivable 1,000
Assume that on July 1, Randall Co. pays the $1,000 amount that Brown had written off on March 1. These are the entries:
Accounts Receivable 1,000
Allowance for Doubtful Accounts 1,000
Cash 1,000
Accounts Receivable 1,000
Duncan Company reports the following financial information before adjustments.
A/R 100000d
Allowance Doubtful Accounts 2000c
Sales 900000d
Sale Returns and allowances 50000c
Prepare the journal entry to record Bad Debt Expense assuming Duncan Company esti
(a)
Bad Debt Expense 8,500
Allowance for Doubtful Accounts 8,500*
*.01 X ($900,000 - $50,000) = $8,500
(b)
Bad Debt Expense 3,000
Allowance for Doubtful Accounts 3,000*
*Step 1: .05 X $100,000 = $5,000 (desired credit balance in allowance account)
Step 2:
Bigelow Corp. lends Scandinavian Imports $10,000 in exchange for a $10,000, three-year note bearing interest at 10 percent annually. The market rate of interest for a note of similar risk is also 10 percent. How does Bigelow record the receipt of the note
$1,000 x 2.48685 = $2,487
Interest PVoOA
$10,000 x .75132 = $7,513
Principle PVo1
Note current market value $10,000
N/R 10000
Cash 10000
Cash 1000
Interest Rev 1000
Jeremiah Company receives a three-year, $10,000 zero-interest-bearing note. The market rate of interest for a note of similar risk is 9 percent. How does Jeremiah record the receipt of the Zero interest bearing note?
10,000 x .77218 = $7,721.80
Principle PVo1
N/R 10000
Discount of Notes Receivable 2278.20
Cash 7,721.80
Journal entry to record interest revenue at the end of the first year. (jeremiah company)
Discount on Note receivable 694.96
Cash 694.96
7,721.80 x 9%
7721.80 + 694.96 = 8416.76
Discount 757.51
Interest rev 757.51. (8416.76 x .09)
Discount. 825.73
Interest ref. 825.73 (9174.27 x .09)
Cash 10,000
A/R 10,000
Morgan Corp. makes a loan to Marie Co. and receives in exchange a three-year, $10,000 note bearing interest at 10 percent annually. The market rate of interest for a note of similar risk is 12 percent. Prepare the journal entry to record the receipt of th
$1,000 x 2.40183 = $2,402
Interest PVoOA
$10,000 x .71178 = $7,118
Principle PVo1
$7,118 + 2,402
Notes Receivable 10,000
Discount on Notes Receivable 480
Cash 9,520
Journal entry to record interest revenue at the end of the first year.
Cash 1,000
Discount on Notes Receivable 142
Interest Revenue 1,142
Oasis Development Co. sold a corner lot to Rusty Pelican as a restaurant site. Oasis accepted in exchange a five-year note having a maturity value of $35,247 and no stated interest rate. The land originally cost Oasis $14,000. At the date of sale the land
Notes Receivable 35,247
Discount on Notes Receivable 15,247
Land 14,000
Gain on Disposal of Land 6,000