Allowance method (Aging of Receivables): Under this method, an aging schedule is prepared which represents the customer’s balances with respect to the time period for which they have been unpaid. An estimated percentage is applied to the total amount in each category (time period) to arrive at the estimated uncollectible amount. This estimated percentage is based on past experience. This method takes into account the previous balance standing in the Allowance for Uncollectible Accounts. The difference between the estimated amount and previous balance is taken in the adjustment entry. Notes Receivable: A Note receivable is a written promisory note which represents a specific amount of cash to be collected from the payer at a future date. It carries a specific rate of interest rate. Sometimes Accounts receivables are converted into Note receivable which gives more time to the debtor to pay the debt. Accrued Interest Revenue: It is the amount of interest which has been earned by the organization but has not become due for collection. Interest on notes receivables is an example of accrued interest. 1. Recording the Journal entries in the books of Relax Recliner Chairs: To indicate: The journal entries for the given transactions

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Chapter 9, Problem P9.38BPGB

To determine

Allowance method (Aging of Receivables): Under this method, an aging schedule is prepared which represents the customer’s balances with respect to the time period for which they have been unpaid. An estimated percentage is applied to the total amount in each category (time period) to arrive at the estimated uncollectible amount. This estimated percentage is based on past experience.

This method takes into account the previous balance standing in the Allowance for Uncollectible Accounts. The difference between the estimated amount and previous balance is taken in the adjustment entry.

Notes Receivable: A Note receivable is a written promisory note which represents a specific amount of cash to be collected from the payer at a future date. It carries a specific rate of interest rate. Sometimes Accounts receivables are converted into Note receivable which gives more time to the debtor to pay the debt.

Accrued Interest Revenue: It is the amount of interest which has been earned by the organization but has not become due for collection. Interest on notes receivables is an example of accrued interest.

1. Recording the Journal entries in the books of Relax Recliner Chairs:

To indicate:

The journal entries for the given transactions

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Swifty Supply Co. has the following transactions related to notes receivable during the last 2 months of 2027. The company does not make entries to accrue interest except at December 31. Nov. 1 Loaned $30,000 cash to Manny Lopez on a 12 month, 10% note. Dec. 11 Sold goods to Ralph Kremer, Inc., receiving a $85,500, 90-day, 8% note. 16 Received a $87,840, 180 day. 10% note to settle an open account from Joe Fernetti. 31 Accrued interest revenue on all notes receivable. (a) Journalize the transactions for Swifty Supply Co. (Ignore entries for cost of goods sold.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. Use 360 days for cal in the order presented in the problem. List all debit entries before credit entries.) Date Account Titles and Explanation Debit Credit