7 Comprehensive Receivables Problem Blackmon Corporations December 31, 2012, balance sheet disclosed the following information relating to its receivables:

Accounts receivable $245,000

Less: Allowance for doubtful accounts (15,000)

$230,000

Notes receivable* 50,000

Total receivables $280,000

*The company has a recourse liability of $700 related to a note receivable sold to a bank.

During 2013, credit sales (terms, n/EOM) totaled $2,200,000, and collections on accounts receivable (unassigned) amounted to $1,900,000. Uncollectible accounts totaling $18,000 from several customers were written off, and a $1,350 accounts receivable previously written off was collected. Additionally, the following transactions relating to Blackmons receivables occurred during the year:

Mar. 6 Received payment of $12,460 on a note from Renko Company. The payment included interest revenue of $460.

31 The March bank statement indicated that the transferred note had been paid at maturity.

May 1 Accepted a 120-day, 13% note from Licata Company in exchange for its account receivable of $4,800.

18 Received a $6,900, 90-day, 12% note from Eagle Manufacturing Corporation for a credit sale.

June 2 Sold both the Licata and Eagle notes with recourse at the bank at 14%. (Assume that Blackmon normally does not sell its notes.) The estimated value of the recourse liability for the Licata and Eagle notes was $650 and $900, respectively.

July 1 Assigned $140,000 of accounts receivable to a ?nance company. Under the terms of the agreement, Blackmon receives 85% of the value of the accounts assigned, minus a service charge of $5,000, and is charged 1.5% per month on the outstanding loan balance.

6 A sales allowance of $2,500 on an assigned account is allowed by Blackmon.

13 A sales return of $800 on an assigned account is granted by Blackmon.

31 Collections of $50,000 are made on assigned accounts. This amount and one months interest are remitted to the ?nance company.

Aug. 31 Assigned accounts of $60,000 are collected, and the remainder of the loan is repaid, including interest.

31 The August bank statement indicated the Eagle note had been paid.

Sept. 1 The bank noti?ed Blackmon that Licata defaulted on its note and charges a fee of $25.

4 Collected the amount due from Licata.

Dec. 31 Collected interest of $5,000 on the outstanding notes receivable.

On December 31, 2013, an aging of the accounts receivable balance indicated the following:

Age Amount Estimated Percentage Uncollectible

Under 30 days $240,487 0.5%

3160 days 113,421 1.5

6190 days 30,933 8.0

91240 days 17,185 35.0

Over 240 days 6,874 70.0

$408,900

Required:

1. Prepare the journal entries to record the preceding receivable transactions during 2013 and the necessary adjusting entry on December 31, 2013. Round calculations to the nearest dollar.

2. Prepare the receivables portion of Blackmons December 31, 2013 balance sheet.

3. Compute Blackmons accounts receivable turnover in days, assuming a 365-day business year. What is your evaluation of its collection policies?

4. If Blackmon uses IFRS, what might be the heading of the section for the receivables reported in Requirement 2?