Instructions: Present the journal entries specified below; show supporting calculations.

The trial balance of Tesla Company at December 31, 2001 includes the following:

Debits Credits

Accounts Receivable 100,000

Allowance for Doubtful Accounts 500

Sales (all on credit) 800,000

Sales Returns and Allowances 60,000

Part A

(1) If Tesla uses the aging method and estimates that $5,000 of receivables will be uncollectible, prepare the adjusting entry.

(2) If Tesla estimates uncollectibles at 1% of net credit sales, prepare the appropriate adjusting entry.

(3) Assume that on February 10, 2001 the specific account of Tom James with a balance of $500, is deemed uncollectible. Record the write-off.

(4) Assume that on August 12, 2001 James pays one-half of the above balance in full and is expected to pay the remainder within 30 days. Record the appropriate entries.

part B

Instructions: Prepare journal entries to record the following events:

July 1 Blackrock Company received an 6%, 2-month $3,000 note dated August 1 from a customer on account.

Nov. 1 The note is honoured and no interest has been accrued.

Nov. 1 Assume instead that the note is dishonoured by its maker and there is hope of future collection.