Question
Exercise 7-28 (Algo) Receivables; transaction analysis [LO7-3, 7-5, 7-6, 7-7, 7-8] Weldon Corporations fiscal year ends December 31. The following is a list of transactions
Exercise 7-28 (Algo) Receivables; transaction analysis [LO7-3, 7-5, 7-6, 7-7, 7-8]
Weldon Corporations fiscal year ends December 31. The following is a list of transactions involving receivables that occurred during 2021:
Mar. | 17 | Accounts receivable of $3,100 were written off as uncollectible. The company uses the allowance method. | ||
30 | Loaned an officer of the company $39,000 and received a note requiring principal and interest at 8% to be paid on March 30, 2022. | |||
May | 30 | Discounted the $39,000 note at a local bank. The banks discount rate is 9%. The note was discounted without recourse and the sale criteria are met. | ||
June | 30 | Sold merchandise to the Blankenship Company for $26,000. Terms of the sale are 3/10, n/30. Weldon uses the gross method to account for cash discounts. | ||
July | 8 | The Blankenship Company paid its account in full. | ||
Aug. | 31 | Sold stock in a nonpublic company with a book value of $6,400 and accepted a $7,400 noninterest-bearing note with a discount rate of 9%. The $7,400 payment is due on February 28, 2022. The stock has no ready market value. | ||
Dec. | 31 | Weldon estimates that the allowance for uncollectible accounts should have a balance in it at year-end equal to 3% of the gross accounts receivable balance of $930,000. The allowance had a balance of $26,000 at the start of 2021. |
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1
Accounts receivable of $3,100 were written off as uncollectible. The company uses the allowance method.
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2
Loaned an officer of the company $39,000 and received a note requiring principal and interest at 8% to be paid on March 30, 2022.
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3
Record the accrued interest revenue on the discounted note.
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4
Record the cash received on the discounted note.
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5
Sold merchandise to the Blankenship Company for $26,000. Terms of the sale are 3/10, n/30. Weldon uses the gross method to account for cash discounts.
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6
The Blankenship Company paid its account in full.
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7
Sold stock with a book value of $6,400 and accepted a $7,400 noninterest-bearing note with a discount rate of 9% due on February 28, 2022.
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8
To record the accrual of interest earned on note receivable.
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9
To record the accrual of bad debt expense.
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