March 17, 2018 1 Allowance for uncollectible accounts 1,700 Accounts receivable 1,700 March 30, 2018 Note receivable 20,000 2 Cash 20,000 Interest receivable 233 May 30, 2018 Interest revenue 233 Cash May 30, 2018 19,973 260 Loss on sale of note receivable Interest receivable 233 Note receivable 20,000 5 June 30, 2018 Accounts receivable 12,000 Sales revenue 12,000 Cash July 08, 2018 11,760 Sales discounts 240 Accounts receivable 12,000 August 31, 2018 Note receivable 7 6,000 760 Gain on sale of investments Discount on note receivable 240 Investments 5,000 December 31, 201 Bad debt expense 14,000 Allowance for uncollectible accounts 14,000 December 31, 201 Discount on note receivable Interest revenue
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Okay, I have everything else in the
Here's the original (complete) problem:
Weldon Corporation’s fiscal year ends December 31. The following is a list of transactions involving receivables that occurred during 2018:
| Mar. | 17 | Accounts receivable of $1,700 were written off as uncollectible. The company uses the allowance method. | ||
| 30 | Loaned an officer of the company $20,000 and received a note requiring principal and interest at 7% to be paid on March 30, 2019. | |||
| May | 30 | Discounted the $20,000 note at a local bank. The bank’s discount rate is 8%. The note was discounted without recourse and the sale criteria are met. | ||
| June | 30 | Sold merchandise to the Blankenship Company for $12,000. Terms of the sale are 2/10, n/30. Weldon uses the gross method to account for cash discounts. | ||
| July | 8 | The Blankenship Company paid its account in full. | ||
| Aug. | 31 | Sold stock in a nonpublic company with a book value of $5,000 and accepted a $6,000 noninterest-bearing note with a discount rate of 8%. The $6,000 payment is due on February 28, 2019. The stock has no ready market value. | ||
| Dec. | 31 |
My question:
Dec. 31, 2018: Record accrued interest.
I know it's a debit to Discount on note receivable and a credit to Interest revenue, but I have zero idea how to get the actual number.
Please help me! My brain is mush at this point...
Thank you!
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