Seerden Servicing monitors its accounts receivable carefully. A review determined that a customer, John Daley, was unable

Question:

Seerden Servicing monitors its accounts receivable carefully. A review determined that a customer, John Daley, was unable to pay his $130,000 past-due account. Seerden accepted a 90-day promissory note dated April 15, 2020, bearing interest of 5% in exchange for Daley’s account. Another customer, ABC Drilling, signed a 4.75%, six-month note dated May 1 in place of its $50,000 past-due accounts receivable. On May 31, Seerden’s year-end, accrued interest was recorded on the notes receivable. John Daley honoured his note on the maturity date. ABC Drilling dishonoured its note on the maturity date. On November 15, Seerden Servicing wrote off ABC Drilling’s account as it was determined to be uncollectible.

Required

Prepare Seerden Servicing’s entries for each of the following dates (round calculations to the nearest whole cent):

a. April 15, 2020

b. May 1, 2020

c. May 31, 2020

d. Maturity date of John Daley’s note

e. Maturity date of ABC Drilling’s note

f. November 15, 2020

Analysis Component: Assuming a $4,000 debit balance in the Allowance for Doubtful Accounts on November 14, 2020, calculate the balance after posting the entry in (f) above. Comment on the adequacy of the Allowance for Doubtful Accounts.

Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...

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