Question

Seen Company has the following transactions. Prepare all required journal entries for the following.  Journal entries should be in good form.  No explanations are required.

1) At December 31, the company calculates their estimated uncollectable amounts for the end of the year to be $50,000.  The balance in the allowance for doubtful accounts is presently at $15,000 debit.

2) On July 1, the company sells merchandise on account for $2500 terms 2/10, n/30.  The cost of the merchandise was $1250.  The company uses a perpetual inventory system.  The customer pays their account on July 6^th.

3) On July 1, the company accepts a $24,000 note from a customer.  The note bears an interest rate of 4%.  Interest is due monthly with the principle due in 6 months.  Prepare the entries for July and December.

Answer 1

Journal netry

No	General Journal	Debit	Credit
1	Bad debt expense (50000+15000)	65000
	Allowance for doubtful accounts		65000
2	Account receivable	2500
	Sales revenue		2500
	(To record sales)
	Cost of goods sold	1250
	Inventory		1250
	(To record cost of goods sold)
	Cash (2500*98%)	2450
	Sales discount	50
	Account receivable		2500
	(To record collection)
3	Notes receivable	24000
	Account receivable		24000
	Cash (24000*4%*6/12+24000)	24480
	Notes receivable		24000
	Interest revenue		480