Problem:
Weldon Corporation's fiscal year ends December 31. The following is a list of transactions involving receivables that occurred during 2011:
Mar. 17 Accounts receivable of $1,700 were written off as uncollectible. The company uses the allowance method.
30 Loaned an officer of the company $25,000 and received a note requiring principal and interest at 7.0% to be paid on March 30, 2012.
May 30 Discounted the $25,000 note at a local bank. The bank's discount rate is 8.5%. The note was discounted without recourse and the sale criteria are met.
June 30 Sold merchandise to the Blankenship Company for $11,000. 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 $3,500 and accepted a $5,500 non-interest-bearing note with a discount rate of 9%. The $5,500 payment is due on February 28, 2012. The stock has no ready market value.
Dec. 31 Bad debt expense is estimated to be 2.2% of credit sales for the year. Credit sales for 2011 were $600,000.