Question

Baer Enterprises’s balance sheet at October 31, 2014 (fiscal year-end) includes the following:
Accounts receivable $379,000
Less: Allowance for uncollectible accounts (33,000)
Accounts receivable (net) $346,000

Transactions for fiscal year 2015 include the following:
1. Due to a product defect, previously sold merchandise totaling $10,500 was returned.
2. Customer accounts totaling $29,750 were written off during the year.
3. On November 1, 2014, Baer sold teleconferencing equipment and received a $75,000 noninterest-bearing note receivable due in three years. The normal cash selling price for the equipment is $56,349. Assume that the appropriate interest rate for this transaction is 10%.
4. Credit sales during the year were $395,000; collections totaled $355,000.
5. Baer sold Hartman, Inc., $45,000 of accounts receivable without recourse. Hartman’s fee for factoring receivables is 9%.
6. Utilizing the gross receivables approach, Baer determined that the 2015 fiscal year-end Allowance for uncollectible accounts should be $35,000.

Required:
1. Prepare journal entries for each of these events. Also prepare the entry to accrue interest income on the note.
2. Show Baer’s balance sheet presentation for accounts and notes receivable at October 31, 2015.




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  • CreatedSeptember 10, 2014
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