A) Marilyn Corporation had record sales in 2016. It began 2016 with an Accounts Receivable balance of $675,000 and an Allowance for Doubtful Accounts of $41,000. Marilyn recognized credit sales during the year of $5,675,000 and made monthly adjusting entries equal to 0.6% of each months credit sales to recognize bad debt expense. Also during the year the company wrote off $45,500 of accounts that were deemed to be uncollectible, although one customer whose $7,000 account had been written off surprised management by paying the amount in full in late September. Including this surprise receipt, $5,703,500 cash was collected on account in 2016.

In preparation for the audited year-end financial statements, the controller prepared the following aging listing of the receivables at December 31, 2016:

	Balance	Percentage estimated to be uncollectible
0-30 days outstanding	$385,000	2%
31-60 days outstanding	$ 109,000	10%
61-90 days outstanding	$ 47,000	15%
Over 90 days outstanding	$67,000	20%

Prepare a schedule calculating the balance in Marilyns Allowance for Doubtful Accounts at December 31, 2016. Prepare any necessary journal entry at year end to adjust the allowance for doubtful accounts to the required balance.

B) Notes Receivable.

On December 31, 2016 Marilyn Inc. provided service to Sports Unlimited, accepting a six percent, five-year promissory note having a maturity value of $800,000 (interest payable annually on December 31). Marilyn Inc. pays 7 percent for its borrowed funds. Sports Unlimited, however, because it is considered a higher risk, pays 9 percent for its borrowed funds.

Instructions

Prepare the journal entries to record the transaction on the books of Marilyn Inc. at December 31, 2016. (Assume that the effective interest method is used.)

Make all appropriate entries for 2017 on the books of Marilyn..