8_1

1.

Nolte Products is undecided about which base to use in estimating uncollectible accounts. On December 31, 2013, the balance in Accounts Receivable was $720,000 and net credit sales amounted to $3,100,000 during 2013. An aging analysis of the accounts receivable indicated that $39,000 in accounts are expected to be uncollectible. Past experience has shown that about 1% of net credit sales eventually are uncollectible.

Instructions

Prepare the adjusting entries to record estimated bad debts expense using the (1) percentage of sales basis and (2) the percentage of receivables basis under each of the following independent assumptions:

(a)	Allowance for Doubtful Accounts has a credit balance of $3,500 before adjustment.
(b)	Allowance for Doubtful Accounts has a debit balance of $530 before adjustment.

(If needed, round numbers to the nearest dollar).

2.

Porter Distributors has the following transactions related to notes receivable during the last two months of the year.

Dec.	1		Loaned $18,000 cash to D. Ponder on a 1-year, 9% note.
	16		Sold goods to M. Wood, receiving a $2,800, 60-day, 10% note.
	31		Accrued interest revenue on all notes receivable.

Instructions

Journalize the transactions for Porter Distributors.

3.

Compute the maturity value for each of the following notes receivable.

1.	A $8,000, 6%, 3-month note dated July 20.
	Maturity value $____________.
2.	A $13,000, 7%, 150-day note dated August 5.
	Maturity value $____________.

8_1 1. Nolte Products is undecided about which base to use in estimating uncollectible accounts. On December 31, 2013, the balance in Accounts Receivable was $720,000 and net credit sales amounted to $3,100,000 during 2013. An aging analysis of the accounts receivable indicated that $39,000 in accounts are expected to be uncollectible. Past experience has shown that about 1% of net credit sales eventually are uncollectible. Instructions Prepare the adjusting entries to record estimated bad debts expense using the (1) percentage of sales basis and (2) the percentage of receivables basis under each of the following independent assumptions: (a) Allowance for Doubtful Accounts has a credit balance of $3,500 before adjustment. (b) Allowance for Doubtful Accounts has a debit balance of $530 before adjustment. (If needed, round numbers to the nearest dollar). 2. Porter Distributors has the following transactions related to notes receivable during the last two months of the year. Dec. 1 Loaned $18,000 cash to D. Ponder on a 1-year, 9% note. 16 Sold goods to M. Wood, receiving a $2,800, 60-day, 10% note. 31 Accrued interest revenue on all notes receivable. Instructions Journalize the transactions for Porter Distributors. 3. Compute the maturity value for each of the following notes receivable. 1. A $8,000, 6%, 3-month note dated July 20. Maturity value $____________. 2. A $13,000, 7%, 150-day note dated August 5. Maturity value $____________.