Journal Entries for Accounts and Notes Receivable Lancaster, Inc., began business on January 1. Certain transactions for the year follow: Jun.8 Received a $15,000, 60 day, eight percent note on account from R. Elliot. Aug.7 Received payment from R. Elliot on her note (principal plus interest). Sep.1 Received a $18,000, 120 day, nine 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. Dec.31 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 $22,600. An analysis of aged receivables indicates that the desired balance of the allowance account should be $19,500. Dec.31 Made the appropriate adjusting entries for interest. 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.) General Journal Date Description Debit Credit Jun.8 Answer Answer Answer Answer Answer Answer Received a 60-day, 8 percent note on account. Aug.7 Answer Answer Answer Answer Answer Answer Notes Receivable—R. Elliot Answer Answer To record receipt of principal plus interest from R. Elliot. Sep.1 Answer Answer Answer Answer Answer Answer Received a 120-day, 9 percent note on account. Dec.16 Answer Answer Answer Answer Answer Answer Received a 45-day, 10 percent note on account. Dec.30 Answer Answer Answer Answer Answer Answer Notes Receivable—B. Shore Company Answer Answer To record dishonoring of B. Shore Company's note. Dec.31 Answer Answer Answer Answer Answer Answer To write off B. Shore's account. Dec.31 Answer Answer Answer Answer Answer Answer To record allowance for uncollectible accounts. Dec.31 Answer Answer Answer Answer Answer Answer To accrue interest income on December 16 note. Save AnswersNext

Journal Entries for Accounts and Notes Receivable Lancaster, Inc., began business on January 1. Certain transactions for the year follow: Jun.8 Received a $15,000, 60 day, eight percent note on account from R. Elliot. Aug.7 Received payment from R. Elliot on her note (principal plus interest). Sep.1 Received a $18,000, 120 day, nine 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. Dec.31 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 $22,600. An analysis of aged receivables indicates that the desired balance of the allowance account should be $19,500. Dec.31 Made the appropriate adjusting entries for interest. 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.) General Journal Date Description Debit Credit Jun.8 Answer Answer Answer Answer Answer Answer Received a 60-day, 8 percent note on account. Aug.7 Answer Answer Answer Answer Answer Answer Notes Receivable—R. Elliot Answer Answer To record receipt of principal plus interest from R. Elliot. Sep.1 Answer Answer Answer Answer Answer Answer Received a 120-day, 9 percent note on account. Dec.16 Answer Answer Answer Answer Answer Answer Received a 45-day, 10 percent note on account. Dec.30 Answer Answer Answer Answer Answer Answer Notes Receivable—B. Shore Company Answer Answer To record dishonoring of B. Shore Company's note. Dec.31 Answer Answer Answer Answer Answer Answer To write off B. Shore's account. Dec.31 Answer Answer Answer Answer Answer Answer To record allowance for uncollectible accounts. Dec.31 Answer Answer Answer Answer Answer Answer To accrue interest income on December 16 note. Save AnswersNext

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

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

Jun.8	Received a $15,000, 60 day, eight percent note on account from R. Elliot.
Aug.7	Received payment from R. Elliot on her note (principal plus interest).
Sep.1	Received a $18,000, 120 day, nine 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.
Dec.31	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
	$22,600. An analysis of aged receivables indicates that the desired balance of the
	allowance account should be $19,500.
Dec.31	Made the appropriate adjusting entries for interest.

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.)

General Journal
Date	Description	Debit	Credit
Jun.8	Answer	Answer	Answer
	Answer	Answer	Answer
	Received a 60-day, 8 percent note on account.
Aug.7	Answer	Answer	Answer
	Answer	Answer	Answer
	Notes Receivable—R. Elliot	Answer	Answer
	To record receipt of principal plus interest from R. Elliot.
Sep.1	Answer	Answer	Answer
	Answer	Answer	Answer
	Received a 120-day, 9 percent note on account.
Dec.16	Answer	Answer	Answer
	Answer	Answer	Answer
	Received a 45-day, 10 percent note on account.
Dec.30	Answer	Answer	Answer
	Answer	Answer	Answer
	Notes Receivable—B. Shore Company	Answer	Answer
	To record dishonoring of B. Shore Company's note.
Dec.31	Answer	Answer	Answer
	Answer	Answer	Answer
	To write off B. Shore's account.
Dec.31	Answer	Answer	Answer
	Answer	Answer	Answer
	To record allowance for uncollectible accounts.
Dec.31	Answer	Answer	Answer
	Answer	Answer	Answer
	To accrue interest income on December 16 note.

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Step 1

A note receivable appears to be a written commitment to collect a certain amount of money from another party at a later period. The bearer of the note regards this as an asset. Overdue trade receivables are converted into notes receivable on a regular basis, allowing the debtor a second chance to pay while providing the business owner with a personal guarantee.

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