Accounts Receivable $1,200,000

Allowance for Uncollectible accounts

(credit balance) $10,000

Sales $1,200,000

• Assuming that Watkins co provides for bad debts using 1% of Accounts Receivable balance, make necessary entries to provide for bad debts.

• Make necessary entries to write off $2,000 of the outstanding accounts with chandler company.

• Chandler company paid $1,200 of the amount previously stated Assuming that Watkins co uses Sales as the basis for providing for bad debts, show the journal entry to provide for bad debts.

Feb 3, 1998 Watkins co Sold goods costing $200,000 for $550,000 to Chandler company; term 2/10; n/30; FOB destination and ABC paid $3,500 shipping cost.

Feb 8, Chandler company returned $50,000 goods that cost $30,000.

Feb 4, Received 120-day 6% note from Chandler company for the amount due on the transaction of Feb 3.

Required:

• Make necessary entries for all the transactions above and assume that the note was honored on the maturity date.

• Make necessary entries for the note assuming that the note was not honored on the maturity date.

• Assuming the note was discounted at 8% by Watkins, 20 days after the note was received

• discounted note was dishonored, make necessary entries for the previously discounted note that was dishonored and show the date associated to those entries.

• discounted note was honored, make necessary entries, if any, for the previously discounted note that was honored.