Computing Bad Debts Under the Allowance Method Based on Sales

Solstice Inc. has a credit balance of $1,800 in its allowance for doubtful accounts. The amount of credit sales for the period is $240,000, and the balance in accounts receivable is $45,000. Assume that the bad debt estimates are 0.5% of credit sales. What is (1) bad debt expense for the year and (2) the ending balance in the allowance for doubtful accounts?

1.	Bad debt expense	Answer
2.	Allowance for doubtful accounts	Answer

Determining Sales and Interest Revenue using Short-Term Note Receivable

A one-year, $10,000, 12% note was received by Nadia Company for a credit sale. Assuming a market rate of 12%, determine (1) the value of sales revenue recognized upon issuance of the note and (2) interest revenue recognized over the term of the note.

1.	Sales revenue	Answer
2.	Interest revenue	Answer

Determining Sales and Interest Revenue using Long-term Note Receivable

A four-year, $26,000, noninterest-bearing note was received by Willis Company for a credit sale. Assuming a market rate of 5%, determine (1) sales revenue recognized upon issuance of the note and (2) interest revenue recognized over the term of the note.

Note: Round each answer to the nearest whole dollar.

1.	Sales revenue	Answer
2.	Interest revenue	Answer