1-On January 15, 2014, P&P made an entry to write-off $4 million of accounts rec

Question

1-On January 15, 2014, P&P made an entry to write-off $4 million of accounts receivable. On December 11, 2014, one of the customers whose account was written off paid $1,200,000 on their account. Required: Make all entries required for the receipt of the $1,200,000 2-On the first day of the fiscal year, P&P accepted a three-year, zero-interest-bearing note for $1.5 million. The prevailing interest rate is 9 percent. Required: a. Make the original entry by P & P. b. Make any required entry(ies) at the end of the first year.

Explanation / Answer

1) Accounts receivable Dr 1200000            Bad debts Cr 1200000 ( To record reversal of written off account now received) Cash Dr 1200000              Accounts receivable Cr 1200000 ( To record receipt of written off account) 2) Notes receivable Dr 1500000              Accounts receivable Cr 1500000 ( To record receipt of notes receivable) Interest accrued Dr 135000                  Interest Income Cr 135000 ( To record interest accred 1500000 * 9%)

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