1. On March 1 2021, Dig printing company received a 60 day ,11 % interest bearing note from XYZ in settlement of the past due account receivable of K 7,000,000. On March 31 Dig discounted this note at Barclays bank. The bank charged a discount rate of 15%.

1. What are the proceeds for the transaction?
2. Give the general journal entries to record these transactions in the books of Dig

2. Bata Shoe Company sales shoes to various schools across Zambia on credit.

As at 31 December 2020 Bata Shoe had total sales of K900, 000 and total receivables of K75, 300 and a debit balance on its allowance for uncollectable account of K 1, 000. Below is the summery of Bata Shoe ‘s age analysis as at that date.

(Amounts in $)

Age	Kabwe secondary	Kabulonga Secondary	Chingola Secondary	Kitwe boy’s secondary	Total
Current	6,000	9,000		3,600	18,600
1-30		1,200		18,000	19,200
31-60	4,500			7,500	12,000
Over 60	1,500		15,000,	9,000	25,500
Total	12,000,	10,200	15,000	38,100	75,300

On the basis of past experience, the company has estimated the rates below as a percentage of the collectible in each age category

Current 95%

1-30 days past due 92%

31-60 days past due 85%

Over 60 days past due 80%

b) Compute the estimated uncollectible amount at the end of the year

i) Compute the amount of the adjustment for the uncollectible which is to be expensed to the income statement as at 31 December 2020 and show the journal entry for the adjustment

ii) On January 1 2021 Bata Shoe Company received a 7 months 12% note from Kitwe boys in exchange for the total debt outstanding. After 4 months, Bata shoe discounted the note from Kitwe boys to Finance bank at the rate of 15 %.

a) Determine the maturity date and maturity value of the note

b) How much will finance bank give to Bata Shoe

c) Show the journal entry for this transaction

Answer rating: 100% (QA)

I K 6913699 Discount amount Notes receivable amount x Rate of discount x Remaining days 365 days Rem... View the full answer