Lancaster, Inc., began business on January 1. Certain transactions for the year
ID: 2561855 • Letter: L
Question
Lancaster, Inc., began business on January 1. Certain transactions for the year follow: Jun.8 Received a $20,000, 60 day, six percent note on account from R. Elliot. Aug.7 Received payment from R. Elliot on her note (principal plus interest). Sep. Received an $18,000, 120 day, seven percent note from B. Shore Company on account. Dec.16 Received a $14,400, 45 day, ten percent note from C. Judd on account. Dec.30 B. Shore Company failed to pay its note Dec.31 Wrote off B. Shore's account as uncollectible. Lancaster, Inc. uses the allowance method of providing for credit losses. Recorded expected credit losses for the year by an adjusting entry. Accounts written off during this first year have created a debit balance in the Allowance for Doubtful Accounts of $24,500. An analysis of aged receivables indicates that the desired balance of the allowance account should be $21,300. Dec.31 Dec.31 Made the appropriate adjusting entries for interest. Required Record the foregoing transactions and adjustments in general journal form. (Round all interest income calculations to the nearest dollar.) General Journal Date Description Debit Credit Jun.8 Notes Receivable-R. Elliot 20,000 Accounts Receivable-R. Elliot 20,000 Received a 60-day, 6 percent note on account. Aug.7 Cash 20,200 0 Interest Income 0 200 Notes Receivable-R. Elliot 20,000 To record receipt of principal plus interest from R. Elliot. Sep. Notes Receivable-B. Shore Company 18,000 Accounts Receivable-B, Shore Company 18,000 Received a 120-day, 7 percent note on account.Explanation / Answer
General Journal
Date Description Debit Credit
June 8 Notes Receivable---R Elliot 20,000
Accounts Receivable - - R Elliot 20,000
Received a 60 day note on account
Aug 7 Cash 20,200
Interest Income 200
Notes Receivable - - R Elliot 20,000
To Record receipt of principal plus interest from R Elliot
Sep 1 Notes Receivable - - B Shore Company 18,000
Accounts Receivable--B Shore Company 18,000
Received a 120 day, 7percent note on account
Dec 16 Notes Receivable - - C. Judd 14,400
Accounts Receivable - -C. Judd 14,400
Received a 45 day, 10 percent note on account
Dec 30 Accounts Receivable - - B Shore Company 18,420
Interest Income 420
Notes Receivable - - B Shore Company 18,000
To Record dishonor ingredients of B Shore Company's note
Dec 31 Allowance for Doubtful Accounts 18,420
Accounts Receivable - - B Shore Company 18,420
To write off B Shore's account
Dec 31 Bad debts expense 43,540
Allowance for Doubtful Accounts 43,540
To Record allowance for uncollectible debts
Dec 31 Notes Receivable - -C. Judd 60
Interest Income 60
To accrue interest income on Dec 16 note
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