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Accounts and Notes Receivable

Lenox Corp. sold merchandise for $3,700 to M. Baxter on May 15, 2017, with payment due in 28 days. Subsequent to this, Baxter experienced cash-flow problems and was unable to pay its debt. On August 10, 2017, Lenox stopped trying to collect the outstanding receivable from Baxter and wrote off the account as uncollectible. On December 1, 2017, Baxter sent Lenox a check for $900 and offered to sign a two-month, 12%, $2,800 promissory note to satisfy the remaining obligation. Baxter paid the entire amount due Lenox, with interest, on January 31, 2018. Lenox ends its accounting year on December 31 each year and uses the allowance method to account for bad debts.

Required:

Identify and analyze all transactions on the books of Lenox Corp. from May 15, 2017, to January 31, 2018. Do not round intermediate calculations. If required, round your final answer to the nearest dollar. The effect of the sale transaction on May 15.

Activity	OperatingInvestingFinancing
Accounts	Account Receivable - M. Baxter Increase, Sales Revenue IncreaseAccount Receivable - M. Baxter Increase, Sales Revenue DecreaseAccount Receivable - M. Baxter Decrease, Sales Revenue IncreaseAccount Receivable - M. Baxter Decrease, Sales Revenue Decrease
Statement(s)	Balance Sheet onlyIncome Statement onlyBalance Sheet and Income Statement

How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.

Balance Sheet

Income Statement

Stockholders'

Net

Assets

=

Liabilities

+

Equity

Revenues

Expenses

=

Income

Accounts Receivable - M. BaxterCashNet SalesRetained EarningsSales RevenueNo Entry

fill in the blank 66192ff9c026f88_2

Accounts Payable - M. BaxterCashNet SalesRetained EarningsSales RevenueNo Entry

fill in the blank 66192ff9c026f88_4

fill in the blank 66192ff9c026f88_5

Accounts Payable - M. BaxterBad Debts ExpenseCashRetained EarningsSales RevenueNo Entry

fill in the blank 66192ff9c026f88_7

Accounts Receivable - M. BaxterCashNet SalesRetained EarningsSales RevenueNo Entry

fill in the blank 66192ff9c026f88_9

fill in the blank 66192ff9c026f88_10

The effect of the transaction to write off the account on August 10.

Activity	OperatingInvestingFinancing
Accounts	Allowance for Doubtful Accounts Increase, Accounts Receivable - M. Baxter IncreaseAllowance for Doubtful Accounts Increase, Accounts Receivable - M. Baxter DecreaseAllowance for Doubtful Accounts Decrease, Accounts Receivable - M. Baxter IncreaseAllowance for Doubtful Accounts Decrease, Accounts Receivable - M. Baxter Decrease
Statement(s)	Balance Sheet onlyIncome Statement onlyBalance Sheet and Income Statement

How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item.

Balance Sheet

Income Statement

Stockholders'

Net

Assets

=

Liabilities

+

Equity

Revenues

Expenses

=

Income

Allowance for Doubtful AccountsBad Debt ExpenseCashRetained EarningsSales RevenueNo Entry

fill in the blank 674cdbfda04307d_2

Accounts Receivable - M. BaxterBad Debt ExpenseCashRetained EarningsSales RevenueNo Entry

fill in the blank 674cdbfda04307d_4

fill in the blank 674cdbfda04307d_5

Accounts Receivable - M. BaxterBad Debt ExpenseCashRetained EarningsSales RevenueNo Entry

fill in the blank 674cdbfda04307d_7

Allowance for Doubtful AccountsBad Debt ExpenseCashRetained EarningsSales RevenueNo Entry

fill in the blank 674cdbfda04307d_9

fill in the blank 674cdbfda04307d_10

Accounts Receivable - M. BaxterBad Debt ExpenseCashRetained EarningsSales RevenueNo Entry

fill in the blank 674cdbfda04307d_12

Allowance for Doubtful AccountsBad Debt ExpenseCashRetained EarningsSales RevenueNo Entry

fill in the blank 674cdbfda04307d_14

fill in the blank 674cdbfda04307d_15

Accounts Receivable - M. BaxterBad Debt ExpenseCashRetained EarningsSales RevenueNo Entry

fill in the blank 674cdbfda04307d_17

Allowance for Doubtful AccountsBad Debt ExpenseCashRetained EarningsSales RevenueNo Entry

fill in the blank 674cdbfda04307d_19

fill in the blank 674cdbfda04307d_20

The effect of the transaction to reinstate the allowance account on December 1.

Activity	OperatingInvestingFinancing
Accounts	Account Receivable - M. Baxter Increase, Allowance for Doubtful Accounts IncreaseAccount Receivable - M. Baxter Increase, Allowance for Doubtful Accounts DecreaseAccount Receivable - M. Baxter Decrease, Allowance for Doubtful Accounts IncreaseAccount Receivable - M. Baxter Decrease, Allowance for Doubtful Accounts Decrease
Statement(s)	Balance Sheet onlyIncome Statement onlyBalance Sheet and Income Statement

How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item.

Balance Sheet

Income Statement

Stockholders'

Net

Assets

=

Liabilities

+

Equity

Revenues

Expenses

=

Income

Accounts Receivable - M. BaxterBad Debt ExpenseCashRetained EarningsSales RevenueNo Entry

fill in the blank 39ca0200cfa4fab_2

Allowance for Doubtful AccountsBad Debt ExpenseCashRetained EarningsSales RevenueNo Entry

fill in the blank 39ca0200cfa4fab_4

fill in the blank 39ca0200cfa4fab_5

Accounts Receivable - M. BaxterBad Debt ExpenseCashRetained EarningsSales RevenueNo Entry

fill in the blank 39ca0200cfa4fab_7

Allowance for Doubtful AccountsBad Debt ExpenseCashRetained EarningsSales RevenueNo Entry

fill in the blank 39ca0200cfa4fab_9

fill in the blank 39ca0200cfa4fab_10

Allowance for Doubtful AccountsBad Debt ExpenseCashRetained EarningsSales RevenueNo Entry

fill in the blank 39ca0200cfa4fab_12

Accounts Receivable - M. BaxterBad Debt ExpenseCashRetained EarningsSales RevenueNo Entry

fill in the blank 39ca0200cfa4fab_14

fill in the blank 39ca0200cfa4fab_15

Accounts Receivable - M. BaxterBad Debt ExpenseCashRetained EarningsSales RevenueNo Entry

fill in the blank 39ca0200cfa4fab_17

Allowance for Doubtful AccountsBad Debt ExpenseCashRetained EarningsSales RevenueNo Entry

fill in the blank 39ca0200cfa4fab_19

fill in the blank 39ca0200cfa4fab_20

The effect of the transaction to collect cash and receive a promissory note on December 1.

Activity	OperatingInvestingFinancing
Accounts	Cash Increase, Notes Receivable Increase, Accounts Receivable - M. Baxter IncreaseCash Increase, Notes Receivable Increase, Accounts Receivable - M. Baxter DecreaseCash Decrease, Notes Receivable Increase, Accounts Receivable - M. Baxter IncreaseCash Decrease, Notes Receivable Increase, Accounts Receivable - M. Baxter Decrease
Statement(s)	Balance Sheet onlyIncome Statement onlyBalance Sheet and Income Statement