Based on the following unadjusted balances, answer the question below:

Sales $405,500

Accounts receivable 42,000

Sales returns 14,000

Allowance for doubtful accounts 760

If the estimate of uncollectibles is made by taking 10% of gross accounts receivable, how much Bad Debt Expense should be recorded?

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In exchange for design services, Parsley, Inc. accepted a $40,000, 6-year, zero-interest bearing note.

Parsleys customer is generally charged 6%.

(a.) Prepare the journal entry to record acceptance of the note.

(a.)

(b.) How much interest revenue should Parsley recognize for the second year? (Use the effective-interest method as practiced in class.)

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