On January 1, 2007, Kenyan Company had Accounts Receivable $154,000; Notes Receivable of $11,000; and Allowance for Doubtful Accounts of $13,200. The note receivable is from Brennan Company. It is a 4-month, 9% note dated December 31, 2006.

Kenyan Company prepares financial statements annually. During the year the following selected transactions occurred. (Kenyan Company uses a periodic inventory system.)

Jan. 5 Sold $12,000 of merchandise to Dorfner Company, terms n/15.

20 Accepted Dorfner Company’s $12,000, 3-month, 9% note for balance due.

Feb. 18 Sold $5,000 of merchandise to Cheng Company and accepted Cheng’s

$5,000, 6-month, 10% note for the amount due.

Apr. 20 Collected Dorfner Company note in full.

30 Received payment in full from Brennan Company on the amount due.

May 25 Accepted Ardan Inc.’s $9,000, 6-month, 8% note in settlement of a pastdue balance on account.

Aug. 18 Received payment in full from Cheng Company on note due.

Sept. 1 Sold $8,000 of merchandise to Charles Company and accepted an

$8,000, 6-month, 10% note for the amount due.

Instructions Journalize the transactions.

Problems: Set B 409 Journalize entries to record transactions related to bad debts.

(SO) 2) 3}

Journalize various receivables transactions.

(SO:1;,.2) 45.5)

410 CHAPTER 8 Explain the impact of transactions on ratios:

discuss acceleration of receipt of cash from receivables.

(SO 8, 9)

Cae Prepare entries for various credit card and notes receivable transactions.

(SO)27 450)6). 9)

(b) A/R bal. $ 5,600

(c) Tot.

receivables $15,868 Calculate and interpret various ratios.

Reporting and Analyzing Receivables