Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

ABC Ltd. had the following account balances as at December 31, 2021: Notes Receivable $175,000 Interest Receivable (on Notes Receivable) $729 In 2022, ABC Ltd.

ABC Ltd. had the following account balances as at December 31, 2021:

Notes Receivable $175,000

Interest Receivable (on Notes Receivable) $729

In 2022, ABC Ltd. had the following transactions:

March 31 Received payment for the above notes receivable. The note was received on November 30, 2021 with a 5% interest rate. The interest is paid at maturity.

June 6 Wrote-off the account of John Smith in the amount of $32,500.

Sept 1 Received a promissory note from Paul Jones in the amount of $105,000 in order to get a time extension on his past due accounts receivable. The note matures on November 30 and pays interest of 6% at maturity.

Nov 30 Paul Jones dishonours the note. ABC Ltd. expects Paul Jones to pay the note.

Dec 31 The company estimates that 5% of its Accounts Receivable will be uncollectible. As at December 31, 2022, the Accounts Receivable balance was $530,000 and the Allowance for Doubtful Accounts balance (before the year end adjusting entry) was $15,000 (credit balance)

Required: 1. Prepare the above journal entries including adjusting entries.

2. What is the net realizable value of Accounts Receivable as at December 31, 2022 after the adjusting entry?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Artificial Intelligence In Accounting Organisational And Ethical Implications

Authors: Othmar M. Lehner, Carina Knoll

1st Edition

1032055626, 9781032055626

More Books

Students also viewed these Accounting questions

Question

Define learning and list at least three learning principles

Answered: 1 week ago