acc107 week 5 homework assignment

Receivables Worksheet
Part 1. Pandot Inc.
On August 25, Maria Gomez purchases $12,500 in products from Pandot
Inc. on credit. The terms of the sale are 5/20, net 45. On September 7, Ms.
Gomez returns $2,500 of product to Pandot. On September 9, she pays her bill in
full.

Prepare the journal entries required to record the sale of
merchandise, the return of merchandise, and the collection of the accounts
receivable. Enter your answers in the shaded areas of the journal below.

Date

Account Names

Debit

Credit

Aug. 25

To record sales on account.

Sept. 7

To record sales return.

Sept. 9

To record payment.

Part 2. Moray Snax Inc.
Moray Snax Inc. sold 500 pounds of eel food to the District Aquarium
on credit on February 7 for $6,000. The terms of the sale were 2/10, net 30.
The District Aquarium pays the bill in full on February 21.

a.
Prepare the entries to record
the sale and the receipt of payment.

Date

Account Names

Debit

Credit

Feb. 7

To record sales on account.

Feb. 21

To record payment.

b.
Why didn’t the Aquarium receive
a discount?

Part 3. Blizzard Company’s
Bad Debt Expense
On December 31, the Blizzard Company has a receivables balance of
$55,000. Blizzard accountants have estimated that 5% of this balance will be
uncollectible. Prior to any year-end adjustments, the balance in the allowance
account is a $1000 debit.

a.
Prepare the journal entry to
record bad debt expense for the year and show the calculation for bad debt
expense in T-Account form. Enter your answers in the shaded areas of the
journal and T-account below.

Allowance
for Bad Debts

Existing balance

Adjustment required = Bad
debt expense

Desired balance
(55,000 x 5%)

Date

Account Names

Debit

Credit

Dec. 31

b.
On January 17, the Blizzard
Company determines that an account receivable of $500 is uncollectible. Prepare
the necessary journal entries to write it off the books. Hint: The company will write off the receivable and reduce the balance
in the allowance account that was created when the bad debt expense was entered.

Date

Account Names

Debit

Credit

Jan. 17

Part 4. Calculate Interest
on Notes Receivable
Read each of the following scenarios.
1.
On 10/1, Company A accepts a
$15,000, 5%, 6-month note receivable.

2.
On 4/1, Company B accepts a
$30,000, 10%, 3-month note receivable.

3.
On 3/15, Company C accepts a
$25,000, 7%, 6-month note receivable.

Assuming a December 31 year
end, calculate the current-year interest revenue for each of the scenarios.
Hint: Remember, Interest = Principal x Annual Rate of Interest x Time Outstanding. Enter your answers in the shaded areas
below.

1.
Company A interest revenue =

2.
Company B interest revenue =

3.
Company C interest revenue =

Part 5. Record Notes
Receivable
Dolce Company has a fiscal year end of December 31. On March 1,
Dolce accepts $10,000 cash and a six-month, 5%, $40,000 note receivable from
Flicker, Inc. for services provided. Flicker paid the principal and interest at
maturity.

a.
Prepare all journal entries
from the acceptance of the note to the maturity date. Enter your answers in the
shaded areas below. A couple of account names have been filled in for you.

Date

Account Names

Debit

Credit

Mar. 1

Cash

To record acceptance of the note.

Sept. 1

Cash

To record payment of the note.