Problem 1: On December 31, 2011, Vale Company had an unadjusted credit balance of $1,000 in its Allowance for uncollectible accounts. An analysis of Vale's trade accounts receivable at that date revealed the following:
Estimated
Age Amount Uncollectible
0 - 30 days $60,000 5%
31 - 60 days 4,999 10
Over 60 days 2,000 70
a) What amount should Vale report as Allowance for uncollectible accounts in its December 31, 2011, balance sheet?
Problem 2. On December 31, 2011, Fenton Company sold equipment to Denver, Inc., accepting a $275,000 noninterest-bearing note receivable in full payment on December 31, 2014, Denver, Inc., normally pay 12% for its borrowed funds. The equipment is carried in Fenton's perpetual inventory records at 65% of its cash selling price.
a. Prepare Fenton's journal entries to record the sale on December 31, 2011.
b. Prepare Fenton's journal entry on December 31, 2012, necessitated by this transaction.
(Prepare an amortization schedule for the loan)
c. Show Fenton's balance sheet presentation of Denver's note at December 31, 2012.