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.