Chapter 8: Q15RQ (page 465)
When a receivable is written off under the allowance method, how does it affect the net realizable value shown on the balance sheet?
There will be no change in net realizable value.
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Journalizing note receivable transactions
The following selected transactions occurred during 2018 and 2019 for Baltic Importers. The company ends its accounting year on September 30.
2018 | |
Jul. 1 | Loaned \(16,000 cash to Bud Shyne on a one-year, 8% note. |
Sep. 6 | Sold goods to Lawn Pro, receiving a 90-day, 6% note for \)11,000. Ignore Cost of Goods Sold. |
30 | Made a single entry to accrue interest revenue on both notes. |
? | Collected the maturity value of the Lawn Pro note. |
2019 | |
Jul. 1 | Collected the maturity value of the Shyne note. |
Journalize all required entries. Make sure to determine the missing maturity date. Round to the nearest dollar
How do the percent-of-receivables and aging-of-receivables methods compute bad debts expense?
When is bad debts expense recorded when using the direct write-off method?
Johnson Company uses the allowance method to account for uncollectible receivables. On September 2, Johnson wrote off a
\(14,000 account receivable from customer J. Mraz. On December 12, Johnson unexpectedly received full payment from Mraz on
the previously written off account. Johnson records an adjusting entry for bad debts expense of \)800 on December 31.
9. Journalize Johnson’s write-off of the uncollectible receivable.
10. Journalize Johnson’s collection of the previously written off receivable.
11. Journalize Johnson’s adjustment for bad debts expense.
What are some benefits to a business in accepting credit cards and debit cards?
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