Transactions for the year 2019 are summarized as follows:

1. Sold merchandise on credit in the amount of $325,000, terms 2/10, N30. The cost of the merchandise sold was $195,500.

2. Collected accounts receivable in the amount of $ 278,950, minus discounts of $ 3,000.

3. Wrote off an uncollectible account in the amount of $2,600.00.

4. Accepted a 60-day, 8 % note receivable in the amount $12,500.00 from a credit customer, in exchange for an extension on a customers overdue account receivable. The issue date of the note was December 10, 2019

Part A

1. Prepare General Journal entries to record the 2019 transactions of Sterling Company (11)

2. Post your journal entries to the GL (GL pages below) and calculate the unadjusted balances at December 31, 2019 for Accounts Receivable and Allowance for Doubtful Accounts (AFDA).

(Dont forget the extension of the overdue account receivable.) (5)

3. Prepare the year end adjusting entry for Bad Debt Expense using the balance sheet approach. Sterling estimates Bad Debt Expense at 2 % of year end 2019 Accounts Receivable. (3)

Prepare the year end adjusting entry for interest earned on the Note Receivable