176.A company that uses the percent of sales to account for its bad debts had credit sales of $740,000 in Year 1, including a $720 sale to Marshall Fresh. On December 31, Year 1, the company estimated its bad debts at 1.5% of its credit sales. On June 1, Year 2, the company wrote off, as uncollectible, the $720 account of Marshall Fresh. On December 21, Year 2, Marshall Fresh unexpectedly paid his account in full. Prepare the necessary journal entries:
(a) On December 31, Year 1, to reflect the estimate of bad debts expense.
(b) On June 1, Year 2, to write off the bad debt.
(c) On December 21, Year 2, to record the unexpected collection.
Year 1
177.The following series of transactions occurred during Year 1 and Year 2, when Foxworth Co. sold merchandise to Kevin Lewis. Foxworth's annual accounting period ends on December 31.
10/01/Yr 1Sold $12,000 of merchandise to K. Lewis, terms 2/10, n/30.
11/15/Yr 1Lewis reports that he cannot pay the account until early next year. He agrees to exchange the account for a 120-day, 12% note receivable.
12/31/Yr 1Prepared the adjusting journal entry to record accrued interest on the note.
03/15/Yr 2Foxworth receives a check from Lewis for the maturity value (with interest) of the note.
03/22/Yr 2Foxworth receives notification that Lewis’ check is being returned for nonsufficient funds (NSF).
12/31/Yr 2Foxworth writes off Lewis’ account as uncollectible.
Prepare Foxworth Co.'s journal entries to record the above transactions. The company uses the allowance method to account for its bad debt expense.
178.Prepare general journal entries for the following transactions of Norman Company, assuming they use the allowance method to account for uncollectible accounts.
Apr. 01Sold $3,500 of merchandise to Lance Co., receiving an 8%, 90-day, $3,500 note.
15Wrote off $1,500 owed by Guy Co. from a previous period sale.
30Received a $5,000, 6%, 30-day note receivable from James Co. as settlement for its $5,000 account receivable.
May 30The note received from James on April 30 was collected in full.
Jun. 30Lance Co. was unable to pay the note on the due date.
Jul. 15Guy Co. paid $1,000 of the amount written off on April 15.