Question
Accounts and Notes Receivable Lenox Corp. sold merchandise for $5,000 to M. Baxter on May 15, 2016, with payment due in 40 days. Subsequent to
Accounts and Notes Receivable
Lenox Corp. sold merchandise for $5,000 to M. Baxter on May 15, 2016, with payment due in 40 days. Subsequent to this, Baxter experienced cash-flow problems and was unable to pay its debt. On August 10, 2016, Lenox stopped trying to collect the outstanding receivable from Baxter and wrote off the account as uncollectible. On December 1, 2016, Baxter sent Lenox a check for $1,000 and offered to sign a two-month, 12%, $4,000 promissory note to satisfy the remaining obligation. Baxter paid the entire amount due Lenox, with interest, on January 31, 2017. Lenox ends its accounting year on December 31 each year and uses the allowance method to account for bad debts.
Required:
1. Prepare all of the necessary journal entries on the books of Lenox Corp. from May 15, 2016, to January 31, 2017. Indicate the effect on financial statement items by selecting "" for decrease (or negative effect), "+" for increase (or positive effect) and "NE" for No Entry (or no effect) on the financial statement.
| Journal | Balance Sheet | Income Statement | |||||||||||||
| Stockholders | Net | ||||||||||||||
| Date | Description | Debit | Credit | Assets | = | Liabilities | + | Equity | Revenues | Expenses | = | Income | |||
| 2016 | |||||||||||||||
| May 15 | |||||||||||||||
| Journal | Balance Sheet | Income Statement | |||||||||||||
| Stockholders | Net | ||||||||||||||
| Date | Description | Debit | Credit | Assets | = | Liabilities | + | Equity | Revenues | Expenses | = | Income | |||
| 2016 | |||||||||||||||
| Aug. 10 | |||||||||||||||
| Journal | Balance Sheet | Income Statement | |||||||||||||
| Stockholders | Net | ||||||||||||||
| Date | Description | Debit | Credit | Assets | = | Liabilities | + | Equity | Revenues | Expenses | = | Income | |||
| 2016 | |||||||||||||||
| Dec. 1 | |||||||||||||||
| Journal | Balance Sheet | Income Statement | |||||||||||||
| Stockholders | Net | ||||||||||||||
| Date | Description | Debit | Credit | Assets | = | Liabilities | + | Equity | Revenues | Expenses | = | Income | |||
| 2016 | |||||||||||||||
| Dec. 1 | |||||||||||||||
| Journal | Balance Sheet | Income Statement | |||||||||||||
| Stockholders | Net | ||||||||||||||
| Date | Description | Debit | Credit | Assets | = | Liabilities | + | Equity | Revenues | Expenses | = | Income | |||
| 2016 | |||||||||||||||
| Dec. 31 | |||||||||||||||
| Journal | Balance Sheet | Income Statement | |||||||||||||
| Stockholders | Net | ||||||||||||||
| Date | Description | Debit | Credit | Assets | = | Liabilities | + | Equity | Revenues | Expenses | = | Income | |||
| 2017 | |||||||||||||||
| Jan. 31 | |||||||||||||||
2. Which of the following is true in regards to Baxter sending in a partial payment with the remaining balance owed through a formal note?
- Baxter needed to do this to avoid bankruptcy.
- Baxter wanted to reestablish a good credit standing with its suppliers.
- The bank forced Baxter to fulfill all its debt obligations.
- Baxter could not bear the guilt of nonpayment.
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Currency Internationalization Global Experiences And Implications For The Renminbi
Authors: Wensheng Peng, Chang Shu
2nd Edition
0230580491, 9780230580497
