Catcus Enteprises completed the following selected transactions during the year 20X0

Month

Day

Event

July 14

Writes off a $750 accounts receivable arising from a sale to Bradshaw Limited. The transaction took place 10 months ago. Catcus Enterprises uses the allowance method.

30

Catcus Enterprises receives a $1,000, a 90-day, 10% note for merchandise sold to Sunpower Limited (the merchandise cost was $600).

August

15

Recevied $2,000 cash plus a $10,000 note from Jetwise Limited in exchange for merchandise that sells for $12,000 (its cost is $8,000). The note is dated 15 August, bears 12% interest, and matures in 120 days.

November

1

Completed a $120 credit card sale with a 4% fee (cost of sales is $150). The cash is received immediately from the credit card company.

3

Sunpower Limited refuses to pay the note that was due to Catcus Enterprises which was issued on 30 July. Prepare the journal entry to change the dishonoured note plus accrued interest to Sunpower Limited's accounts receivable.

5

Completed $500 credit card sale with a 5% fee (the cost of sales is $300). The payment from the credit card company is received on 9 November.

15

Received the full amount of $750 from Bradshaw Limited that was previously written off on 14 July. Record the bad debt recovery.

December

13

Received payment of principal plus interest from Jetwise Limited for the 15 August note.

Required:

Part A: Prepare the journal entries to record these transactions on Catcus Enterprises books. -

I.1 July

II.30 July

III.15 August

IV.1 November

V.3 November

VI.5 November including 9 November

VII.15 November

VIII.13 December to record collect note with interest

Part B: Prepare an adjusting entry as of 31 December 20X0, assuming bad debts are estimated to be $20,400 by aging accounts receivable. The unadjusted trial balance of the Allowance for Doubtful Accounts is $1,000 debit. -

Part C: Prepare an adjusting entry as of 31 December 20X0, assuming that bad debts are estimated using the percent sales method. The Allowance for Doubtful Accounts had a $1,000 debit balance before adjustment, and the company estimates bad debts to be 1% of its credit card sales of $2 million. -