Problem 1: The ledger of Windsor Company at the end of the current year shows Accounts Receivable $149,000, Sales Revenue $853,000, and Sales Returns and Allowances $23,000.
Journalize the following independent situations.
1. If Windsor uses the direct write-off method to account for uncollectible accounts, how do you journalize the adjusting entry at December 31, assuming Windsor determines that L. Dole's $1,500 balance is uncollectible?
2. If Allowance for Doubtful Accounts has a credit balance of $2,500 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 10% of accounts receivable?
3. If Allowance for Doubtful Accounts has a debit balance of $310 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 8% of accounts receivable?
Problem 2: At December 31, 2019, Vaughn Company had a credit balance of $19,800 in Allowance for Doubtful Accounts. During 2020, Vaughn wrote off accounts totaling $11,800. One of those accounts ($2,600) was later collected. At December 31, 2020, an aging schedule indicated that the balance in Allowance for Doubtful Accounts should be $31,100.
How do prepare journal entries to record the 2020 transactions of Vaughn Company?
Problem 3: Kingbird Supply Co. has the following transactions related to notes receivable during the last 2 months of 2020. The company does not make entries to accrue interest except at December 31.
Nov. 1 Loaned $25,200 cash to Manny Lopez on a 12-month, 10% note.
Dec. 11 Sold goods to Ralph Kremer, Inc., receiving a $65,250, 90-day, 8% note.
Dec. 16 Received a $65,280, 180 day, 10% note in exchange for Joe Fernetti's outstanding accounts receivable.
Dec. 31 Accrued interest revenue on all notes receivable.
Required:
1. How do journalize the transactions for Kingbird Supply Co.?
2. Record the collection of the Lopez note at its maturity in 2021?
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