ACCT 1A: Financial Accounting…Ch 7-9

1. Diablo Company applies the direct write-off method in accounting for uncollectible accounts.

June

Diablo determines that it cannot collect $9,000 of its accounts receivable from its customer Chaffey Company.

Chaffey Company unexpectedly pays its account in full to Diablo Company. Diablo records its recovery of this bad debt.

Prepare journal entries to record the above selected transactions of Diablo. (Omit the “$” sign in your response.)

2. Following are selected transactions Deshawn Company for 2010.

Dec.

13  

Accepted a $10,000, 45-day, 8% note dated December 13 in granting Latisha Clark a time extension on her past-due account receivable.

31  

Prepared an adjusting entry to record the accrued interest on the Clark note.

3. Prepare journal entries for the above transactions. (Use a 360-day year for interest calculation. Omit the “$” sign in your response.)

At year-end (December 31), Alvare Company estimates its bad debts as 0.5% of its annual credit sales of $875,000. Alvare records its Bad Debts Expense for that estimate. On the following February 1, Alvare decides that the $420 account of P. Coble is uncollectible and writes it off as a bad debt. On June 5, Coble unexpectedly pays the amount previously written off.

Prepare the journal entries of Alvare to record these transactions and events of December 31, February 1, and June 5. (Omit the “$” sign in your response.)