Problem 1 Use the provided partial chart of accounts when preparing general jour

Question

Problem 1 Use the provided partial chart of accounts when preparing general journal entries in the space provided below Chart of Accounts . Cash . Accounts Receivable Allowance for Doubtful Accounts Notes Receivable Interest Receivable Office Equipment Machinery .Accumulated Depreciation Accounts Payable Interest Payable . Common Stock .Retained Earnings . Sales Interest Revenue . Depreciation Expense Interest Expense .Bad Debt Expense Insurance Expense . Gain on Sale of Asset Loss on Sale of Asset Part A Atlas Inc. had $185,000 of accounts receivable and $590.000 in sales during the year. The December 31st balance, before any adjustments, for the Allowance for Doubtful Accounts is $700 (credit balance). Prepare the adjusting journal entry needed on December 31st if Atlas, Inc. estimates baddebtstobel%of sales. (Round all calculations to the nearest whole dollar and show your calculations.) Part B On March 1st, Wholesaler's Warehouse agrees to accept a $2,000, 90-day, 5% note receivable as payment for a customer's past due account receivable. Use this information and the chart of accounts above to answer the following questions: What journal entry is required on Wholesaler's Warehouse's books when the note receivable is accept in replace of the account receivable on March 1st? a. b. What is the maturity date of the note? (show your calculations) c. What journal entry is required on Wholesaler's Warehouse's books on the note maturity date if the note is paid as agreed? (Round all calculations to the nearest whole dollar and show your calculations.)

Explanation / Answer

Part A

Adjusting journal entry:

Part B

a.

b. Maturity date of the note: May 30

March (31 - 1) + April 30 + May 30 = 90 days

c.

Note: Alternately, interest may be calculated as ($2000 x 5% x 90/365) = $24.65 = $25

Date General Journal Debit Credit Dec. 31 Bad debt expense ($590000 x 1%) 5900 Allowance for doubtful accounts 5900 (To record bad debt expense)

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