HOW ARE THE NUMBERS CALCULATED IN #$7??$

Weldon Corporation$$s fiscal year ends December $31.$ The following is a list of transactions involving receivables that occurred during $2024$:

March $17$ Accounts receivable of $$1,700$ were written off as uncollectible. The company uses the allowance method.

March $30$ Loaned an officer of the company $$20,000$ and received a note requiring principal and interest at $7\%$ to be paid on March $30,2025.$

May $30$ Discounted the $$20,000$ note at a local bank. The bank$$s discount rate is $8\%.$ The note was discounted without recourse and the sale criteria are met.

June $30$ Sold merchandise to the Blankenship Company for $$12,000.$ Terms of the sale are $2/10,$ n$/30.$ Weldon uses the gross method to account for cash discounts.

July $8$ The Blankenship Company paid its account in full.

August $31$ Sold stock in a nonpublic company with a book value of $$5,000$ and accepted a $$6,000$ noninterest$-$bearing note with a discount rate of $8\%.$ The $$6,000$ payment is due on February $28,2025.$ The stock has no ready market value.

December $31$ Weldon estimates that the allowance for uncollectible accounts should have a balance in it at year$-$end equal to $2\%$ of the gross accounts receivable balance of $$700,000.$ The allowance had a balance of $$12,000$ at the start of $2024.$

Required:

$1$ & $2.$ Prepare journal entries for each of the above transactions and additional year$-$end adjusting entries indicated.

$1.$ Accounts receivable of $$1,700$ were written off as uncollectible. The company uses the allowance method.

$2.$ Loaned an officer of the company $$20,000$ and received a note requiring principal and interest at $7\%$ to be paid on March $30,2025.$

$3.$ 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 $$12,000.$ Terms of the sale are $2/10,$ 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 $$5,000$ and accepted a $$6,000$ noninterest$-$bearing note with a discount rate of $8\%$ due on February $28,2025.$

$8.$ To record the accrual of interest earned on note receivable.

$9.$ To record the accrual of bad debt expense.

Calculations:

$3.20,000*0\mathrm{.}07\backslash$times $(2/12)$ ~$=$ $$233(2$ months between March $30$ and May $30$ when booked$)$

$4.(20,000\backslash$times $107\%)-[(20,000\backslash$times $107\%)\backslash$times $8\%\backslash$times $(10/12)]$ ~$=$ $$19,973$

$20,000+233=20,233$

$20,233-19,973=$ $$260$

$6.12,000*(1-0\mathrm{.}02)=$ $$11,760$

$0\mathrm{.}02*12,000=$ $$240$

$7.??????$

$8.6,000\backslash$times $0\mathrm{.}08\backslash$times $(4/12)=$ $$160$

$9.$ Closing Balance $=$ CB$,$ Amount written off during period $=$ WO$,$ Beginning Balance $=$ BB

CB $=$ WO $+$ BB

WO $=$ $$1,700**$REFER TO #$1**$

BB $=$ $$12,000**$In this problem$**$

CB $=$ $$1,700+$ $$12,000=$ $$13,700$

Bad debt expense for year $($not accounting for desired ending balance$)=$ $$13,700-$ $$12,000=$ $$1,700$

Desired ending balance for uncollectible accounts at year end$(2\%$ of gross accounts receivable $$700,000)=$ $$700,000*0\mathrm{.}02=$ $$14,000$

Bad debt expense for year $=$ $$14,000-$ $$12,000+$ $$1,700=$ $$3,700$Answer is complete and correct.

$\backslash$table$[[$No$,$Date,General Journal,Debit,Credit$],[1,$March $17,2024,$Allowance for uncollectible accounts,var$,1,700,],[,$Accounts receivable,$,,1,700$