Compute the missing amounts for each of the following notes. Record the followin

Question

Compute the missing amounts for each of the following notes. Record the following transactions on the books of Cohen Co. (Omit cost of goods sold entries.) (a) On July 1, Cohen Co. sold merchandise on account to Tracy Inc. for $22,600, terms 3/10, n/30. (b) On July 8, Tracy Inc. returned merchandise worth $2,700 to Cohen Co. (c) On July 11, Tracy Inc. paid for the merchandise. At the end of 2013, Morley Co. has accounts receivable of $741,900 and an allowance for doubtful accounts of $26,740. 1. On January 24, 2014, it is learned that the company's receivable from Spears Inc. is not collectible and therefore management authorizes a write-off of $4,670. 2. On March 4, 2014, Morley Co. receives payment of $4,670 in full from Spears Inc. Prepare the journal entries to record this transaction.

Explanation / Answer

Assume no. of days in a year is 360 days.

Interest = PRN

--------

100

.Here p = principal

r = rate of interest

n = no. of years

Part 2

When there is sale, accounts receivable debit and sales are credit.

Accounts Receivable dr 22600

Sales 22600

When goods are returned sales return and allowances is debited and accounts receivables are credited.

Sales return & Allowances 2700

Accounts Receivables 2700

When amount is received the following entry is passed

Cash Dr 19303

Sales Discount dr 597

Accounts Receivable 19900

Part 3

When amount is bad debt following entry is passed

Bad Debt dr 4670

Allowance for doubtful debt 4670

When the amount is uncollectible, the following journal entry passed

Allowance for doubtfull debt dr 4670

Accounts Receivable 4670

When bad debts are recovered following 2 entries are passed

Accounts Receivable dr 4670

Allowance for doubtfull debt 4670

Cash dr 4670

Accounts Receivable 4670

Principal Annual Interest rate Time Total Interest Details 27000 6% 60 days 270 270*360/0.06*60 30000 8% 3 years 7200 30000*0.08*3 60000 10% 5 months 2500 2500*12/5*60000 50000 11% 0.6 month 2750 2750/0.11*50000

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