Financial Accounting: An Integrated Statements Approach, 2nd Edition

Instructions

1. Assemble the desired data, using the following column headings:

Bad Debt Expense

Expense Expense Increase (Decrease) Balance of

Actually Based on in Amount Allowance Account,

Year Reported Estimate of Expense End of Year

2. Experience during the first four years of operations indicated that the receivables were ei-
   ther collected within two years or had to be written off as uncollectible. Does the estimate
   of– 43 % of sales appear to be reasonably close to the actual experience with uncollectible ac-
   counts originating during the first two years? Explain.

Gentry Co. wholesales bathroom fixtures. During the current fiscal year, Gentry Co. received the

following notes:

Date Face Amount Term Interest Rate

1. March 3 $32,000 60 days 8%


2. June 15 19,000 30 days 12


3. Aug. 20 10,800 120 days 6


4. Oct. 31 11,500 60 days 9


5. Nov. 23 15,000 60 days 6


6. Dec. 27 8,500 30 days 12

Instructions

1. Determine for each note (a) the due date and (b) the amount of interest due at maturity,
   identifying each note by number.


2. Journalize the entry to record the dishonor of Note (3) on its due date.


3. Journalize the adjusting entry to record the accrued interest on Notes (5) and (6) on
   December 31.


4. Journalize the entries to record the receipt of the amounts due on Notes (5) and (6) in
   January.

The following data relate to notes receivable and interest for Generic Optic Co., a cable manu-

facturer and supplier. (All notes are dated as of the day they are received.)

June 1 Received a $15,800, 9%, 60-day note on account.

July 16 Received a $30,000, 10%, 120-day note on account.

31 Received $16,037 on note of June 1.

Sept. 1 Received a $24,000, 9%, 60-day note on account.

Oct. 31 Received $24,360 on note of September 1.

Nov. 8 Received a $24,000, 7%, 30-day note on account.

13 Received $31,000 on note of July 16.

30 Received a $15,000, 10%, 30-day note on account.

Dec. 8 Received $24,140 on note of November 8.

30 Received $15,125 on note of November 30.

Instructions

Journalize entries to record the transactions.

390 Chapter 8 Receivables

Alternate Problem

8-4B

Details of notes receivable

and related entries

Goal 6

1. Note 2: Due date,
   July 15; Interest due at
   maturity, $190

Alternate Problem

8-5B

Notes receivable entries

Goal 6

GENERAL LEDGER