Journal Entries for Accounts and Notes Receivable Armstrong, Inc., began busines

Question

Journal Entries for Accounts and Notes Receivable
Armstrong, Inc., began business on January 1. Several transactions for the year follow:

Required
Record the foregoing transactions and adjustments in general journal form. (Use 360 days for all interest calculations. Round all Interest Income calculations to the nearest dollar.)

May 2 Received a $16,400, 60 day, ten percent note on account from the Holt Company. Jul.1 Received payment from Holt for its note plus interest. Jul.1 Received a $29,000, 120 day, ten percent note from B. Rich Company on account. Oct.30 B. Rich failed to pay its note. Dec.9 Wrote off B. Rich's account as uncollectible. Armstrong, Inc., uses the allowance method of providing for credit losses. Dec.11 Received a $23,000, 90 day, nine percent note from W. Maling on account. Dec.31 Recorded expected credit losses for the year by an adjusting entry. The allowance for doubtful accounts has a debit balance of $30,300 as a result of accounts written off during this first year. An analysis of aged accounts receivables indicates that the desired balance of the allowance account is $7,800 Dec.31 Made the appropriate adjusting entries for interest.

Explanation / Answer

Journal entries: Date Accounts title and explanations Debit $ Credit $ 2-May Notes receivable Account Dr. 16400     Accounts receivable 16400 1-Jul Cash Account Dr. 16673     Notes receivable Account 16400     Interest revenue (16400*10%*60/360) 273 1-Jul Notes receivable Account Dr. 29000     Accounts receivable 29000 30-Oct Accounts reeivable Account Dr. 29667     Notes receivable Account 29000     Interest revenue (29000*10%*120/360) 967 9-Dec Allowance for doubtful account Dr. 29667    Accounts receivable 29667 11-Dec Notes receivable Account Dr. 23000     Accounts receivable 23000 31-Dec Bad debt expense Account Dr. 38100    Allowance for doubtful account (30300+7800) 38100 31-Dec Interest receivable Account Dr. (23000*9%*20/360) 115     Interest revenue 115

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