Problem 1: Journalize the following transactions using the allowance method of accounting for uncollectible receivables.

Apr.1Sold merchandise on account to Rhen Smithe, $25,000.The cost of the merchandise is $9,200.

Sep. 10Received payment for one-fifth of the receivable from R. Smithe and wrote off the remainder.

Dec. 9Reinstated the account of R. Smithe and received cash in full payment.

ANSWER:

Journal

Page 6

Date

Description

Debit

Credit

Problem 2:List at least four indicators that a receivable may be uncollectible.

ANSWER:

Answers may vary.

1.

2.

3.

4.

Problem 3:Determine the due date and amount of interest due at maturity on the following notes:

Origination

Face

Term

Interest

Maturity

Interest

Date

Amount

of Note

Rate

Date

Amount

(a)

August 15

$20,500

70 days

6%

_______

_______

(b)

May 20

$15,000

210 days

8%

_______

_______

Problem 4:Journalize the following transactions for River Company. Round numbers to the nearest dollar.

November 19 Received a $20,500.00, 90-day, 10%note from Alan Snow in payment of his account.

December31 Accrued interest on the Snow note.

February17 Received the amount due from Snow on his note.

ANSWER

Journal

Page 5

Date

Description

Debit

Credit