40) On January 16, 2015, Whole Circle had sold goods worth $5,000 to Smith on account. It could not collect cash from the customer, and finally decided to write off the account on December 31, 2015.
However, in November 4, 2016, Smith approached the company to make payment, and made payment. Journalize the transactions on December 31, 2015 and November 4, 2016. (Whole Circle uses the allowance method.)
41) Smart Art is a new establishment. During the first year, there were credit sales of $40,000 and collections of credit sales of $36,000. One account for $650 was written off. The company decided to use the percent-of-sales method to account for bad debts expense, and use a factor of 2% for their year-end adjustment of bad debts expense. Prepare the entry to record the bad debt expense.
42) Smart Art is a new establishment. During the first year, there were credit sales of $40,000 and collections of credit sales of $36,000. One account for $650 was written off. The company decided to use the aging method to account for bad debts expense. It has calculated an amount of $200 as their estimate of uncollectible amounts at year-end. Prepare the journal entry required to record Bad debts expense at the end of the year.
43) The Allowance for Bad Debts account has a credit balance of $2,000 before the adjusting entry for bad debt expense. The company's management estimates that 2% of net credit sales will be uncollectible for the year 2015. Net credit sales for the year amounted to $250,000. Give journal entry to record the bad debts expense at December 31, 2015.
Learning Objective 9-4
1) The interest period extends from the original date of the note to the maturity date.
2) The maturity value of a note is the sum of the principal minus interest due at maturity.
3) If the maker of the note fails to repay the borrowed amount on the maturity date, the note is said to be dishonored.
4) Interest rates are generally stated on a monthly basis.
5) While counting the date of maturity of a note, the date of issue of the note should be omitted.
6) The entity that signs the promissory note and promises to pay the required amount is the:
A) maker of the note.
B) banker of the note.
C) holder of the note.
D) payee of the note.