Exercise 7-28 (Algo) Receivables; transaction analysis [LO7-3, 7-5, 7-6, 7-7, 7-8]

Weldon Corporations fiscal year ends December 31. The following is a list of transactions involving receivables that occurred during 2021:

Mar.		17		Accounts receivable of $3,100 were written off as uncollectible. The company uses the allowance method.
		30		Loaned an officer of the company $39,000 and received a note requiring principal and interest at 8% to be paid on March 30, 2022.
May		30		Discounted the $39,000 note at a local bank. The banks discount rate is 9%. The note was discounted without recourse and the sale criteria are met.
June		30		Sold merchandise to the Blankenship Company for $26,000. Terms of the sale are 3/10, 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 $6,400 and accepted a $7,400 noninterest-bearing note with a discount rate of 9%. The $7,400 payment is due on February 28, 2022. The stock has no ready market value.
Dec.		31		Weldon estimates that the allowance for uncollectible accounts should have a balance in it at year-end equal to 3% of the gross accounts receivable balance of $930,000. The allowance had a balance of $26,000 at the start of 2021.

• 1

  Accounts receivable of $3,100 were written off as uncollectible. The company uses the allowance method.

• 2

  Loaned an officer of the company $39,000 and received a note requiring principal and interest at 8% to be paid on March 30, 2022.

• 3

  Record the accrued interest revenue on the discounted note.

• 4

  Record the cash received on the discounted note.

• 5

  Sold merchandise to the Blankenship Company for $26,000. Terms of the sale are 3/10, n/30. Weldon uses the gross method to account for cash discounts.

• 6

  The Blankenship Company paid its account in full.

• 7

  Sold stock with a book value of $6,400 and accepted a $7,400 noninterest-bearing note with a discount rate of 9% due on February 28, 2022.

• 8

  To record the accrual of interest earned on note receivable.

• 9

  To record the accrual of bad debt expense.