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18. Jones Company lends Alabaster Inc. $85,000 on August 6, 2018. This loan was memorialized with a signed note receivable with a repayment term of

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18. Jones Company lends Alabaster Inc. $85,000 on August 6, 2018. This loan was memorialized with a signed note receivable with a repayment term of 90- days with a 10% interest rate. When the loan comes due, Alabaster Inc, must repay the $85,000 principle and S i n interest. Calculate the amount of interest that Alabaster Inc. must pay Jones Company: A) $8,500 B) $2,095 C) $2,125 19. Apply the allowance method: Yoda Enterprises is a brand new business. At the end of the first reporting period, they elect to apply the allowance method for estimating and recognizing bad debt. Yoda Enterprises provides you with the following information: Net sales of $850,000, accounts receivable of 584,000 and the allowance for doubtful accounts of SO. After management aged the receivables, they concluded that 50% of the 584,000 accounts receivable would not be collectible. Using the allowance method - What would the correct journal entry be to record / to recognize bad debt expense based on management's estimate? A) Bad Debts Expenses $42,000 Accounts Receivable $42.000 B) Accounts Receivable $42,000 Allowance for Doubtful Accounts $42,000 C) Bad Debts Expenses $42.000 Allowances for Doubtful Accounts $42.000 D) Allowance for Doubtful Accounts $42,000 Bad Debts Expenses $42,000 20. Review the following journal entry and provide the most likely explanation of what is happening to require this journal entry to be recorded: Sales Returns and Allowances $500 Accounts Receivable $500 A) The company made a sale to a customer on account. B) The company is unhappy with the inventory purchased and it is returning it to the vendor. C) The company is reversing an original customer sale because the customer returned the items they purchased from the company D) The company is recording an adjusting journal entry to be sure sales and accounts receivable balances are correct before the financial statements are issued

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