ditzler company a construction supply company uses the allowance method of accountin 642260
Ditzler Company, a construction supply company, uses the allowance method of accounting for uncollectible accounts receivable. Selected transactions completed by Ditzler Company are as follows:
Feb. 1 |
Sold merchandise on account to Ames Co., $8,000. The cost of the merchandise |
|
sold was $4,500. |
Mar. 15 |
Accepted a 60 day, 12% note for $8,000 from Ames Co. on account. |
Apr. 9 |
Wrote off a $2,500 account from Dorset Co. as uncollectible. |
21 |
Loaned $7,500 cash to Jill Klein, receiving a 90 day, 14% note. |
May 14 |
Received the interest due from Ames Co. and a new 90 day, 14% note as a |
|
renewal of the loan. (Record both the debit and the credit to the notes receivable |
|
account.) |
June 13 |
Reinstated the account of Dorset Co., written off on April 9, and received |
|
$2,500 in full payment. |
July 20 |
Jill Klein dishonored her note. |
Aug. 12 |
Received from Ames Co. the amount due on its note of May 14. |
19 |
Received from Jill Klein the amount owed on the dishonored note, plus interest |
|
for 30 days at 15%, computed on the maturity value of the note. |
Dec. 16 |
Accepted a 60 day, 12% note for $12,000 from Global Company on account. |
31 |
It is estimated that 3% of the credit sales of $1,375,000 for the year ended |
|
December 31 will be uncollectible. |
Instructions
1. Journalize the transactions.
2. Journalize the adjusting entry to record the accrued interest on December 31 on the Global Company note.