Assume that La-Z Recliner Chairs completed the followingselected transactions: 2

Question

Assume that La-Z Recliner Chairs completed the followingselected transactions: 2007 July 1 Sold goods to Wal-Mart, receiving $40,000, 9months, 9%note. Ignore cost of goods sold. Dec. 31 Made and adjusting entry to accrue interest on theWal-Mart note. Dec. 31 Made adjusting entry to record uncollectible-accountexpence based on aging accounts receivable. The aging scheduleshows $14,400 of accounts receivable will not be collected. Priorto this adjustment, the credit balance in Allowance forUncollectible Accounts is $11,300. 2008 (I only need help withJournal entries from April 1 2008 to Dec. 31 2008 I completed theabove on my own) Apr. 1 Collected the maturity value of Wal-mart note. June 23 Sold merchandise to Artesian Corp., receiving a60-day, 10% note for$9,000. Ignore cost of goods sold Aug. 22 Artesian Corp. dishonored (failed to pay) its note atmaturity; we converted maturity value of note to an accountreceivable. Nov. 16 Loaned $20,000 cash to Crane, Inc., receiving a90-day, 12% note. Dec. 5 Collected in full on account from Artesian Corp. Dec. 31 Accrued the interest on the Crane, Inc., note. Assume that La-Z Recliner Chairs completed the followingselected transactions: 2007 July 1 Sold goods to Wal-Mart, receiving $40,000, 9months, 9%note. Ignore cost of goods sold. Dec. 31 Made and adjusting entry to accrue interest on theWal-Mart note. Dec. 31 Made adjusting entry to record uncollectible-accountexpence based on aging accounts receivable. The aging scheduleshows $14,400 of accounts receivable will not be collected. Priorto this adjustment, the credit balance in Allowance forUncollectible Accounts is $11,300. 2008 (I only need help withJournal entries from April 1 2008 to Dec. 31 2008 I completed theabove on my own) Apr. 1 Collected the maturity value of Wal-mart note. June 23 Sold merchandise to Artesian Corp., receiving a60-day, 10% note for$9,000. Ignore cost of goods sold Aug. 22 Artesian Corp. dishonored (failed to pay) its note atmaturity; we converted maturity value of note to an accountreceivable. Nov. 16 Loaned $20,000 cash to Crane, Inc., receiving a90-day, 12% note. Dec. 5 Collected in full on account from Artesian Corp. Dec. 31 Accrued the interest on the Crane, Inc., note.

Explanation / Answer

Date

Dr.

Cr.

1-Jul-07

31-Dec-07

31-Dec-07

1-Apr-08

23-Jun-08

22-Aug-08

16-Nov-08

5-Dec-08

31-Dec-08

Journal Entries

Date

Accounts Title

Dr.

Cr.

1-Jul-07

Notes Receivable $40,000           Sales $40,000

31-Dec-07

Accrued Interest $1,800         Interest Revenue $1,800 ( $40,000 x 9% x 6/12)

31-Dec-07

Bad debts expense $3,100         Allowance for doubtfull account $3,100 ($14,400 - $11,300)

1-Apr-08

Cash $42,700       AccruedInterest $1,800       Interest Revenue ( 3months) $900       NotesReceivable $40,000

23-Jun-08

Notes Receivable $9,000           Sales $9,000

22-Aug-08

Accounts Receivable $9,150         Notes Receivable $9,150 ( $9000 + 10% x $9000 x 2/12)

16-Nov-08

Notes Receivable $20,000           Cash $20,000

5-Dec-08

Cash $9,150       NotesReceivable $9,150

31-Dec-08

Accrued Interest $1,200           InterestRevenue $1,200 ($20,000 x 12% x 45 / 90days)

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