The Giles Agency offers a 8% trade discount when providing advertising

1. The Giles Agency offers a 8% trade discount when providing advertising services of $1,000 or more to its customers. Audrey’s Antiques decides to purchase advertising services of $1,800 (not including the trade discount), while Michael’s Motors purchases only $530 of advertising. Both services are provided on account.

Record both transactions for The Giles Agency, accounting for any trade discounts. (If no entry is required for a transaction/event, select “No journal entry required” in the first account field.)

Record Transactions for Audrey’s Antiques and Michael’s Motors.

2. At the end of the first year of operations, Mayberry Advertising had accounts receivable of $21,800. Management of the company estimates that 10% of the accounts will not be collected.

What adjustment would Mayberry Advertising record for Allowance for Uncollectible Accounts? (If no entry is required for a transaction/event, select “No journal entry required” in the first account field.)

Record the adjusted entry for Allowance for Uncollectiable Accounts

3. At the end of the year, Mercy Cosmetics’ balance of Allowance for Uncollectible Accounts is $700 (debit) before adjustment. The balance of Accounts Receivable is $26,000. The company estimates that 10% of accounts will not be collected over the next year.

What is the adjustment Mercy Cosmetics would record for Allowance for Uncollectible Accounts? (If no entry is required for a transaction/event, select “No journal entry required” in the first account field.)

Record the adjusted entry for Allowance for Uncollectiable Accounts

4. [The following information applies to the questions displayed below.]

At the beginning of the year, Mitchum Enterprises allows for estimated uncollectible accounts of $13,600. By the end of the year, actual bad debts total $15,800.

Following the write-off, what is the balance of Allowance for Uncollectible Accounts? (Enter the amount as a positive value.)

5. Brief Exercise 5-16 Calculate interest revenue on notes receivable (LO5-7)

On October 1, 2018, Oberley Corporation loans one of its employees $22,000 and accepts a 12-month, 9% note receivable.

Calculate the amount of interest revenue Oberley will recognize in 2018 and 2019.

Year – Interest Revenue

2018 – ?

2019 – ?

6. During 2018, its first year of operations, Pave Construction provides services on account of $120,000. By the end of 2018, cash collections on these accounts total $90,000. Pave estimates that 20% of the uncollected accounts will be bad debts.


Required:

1. Record the adjustment for uncollectible accounts on December 31, 2018. (If no entry is required for a transaction/event, select “No journal entry required” in the first account field.)

Record the adjusting entry for allowance for uncollrctiabe acounts.

Calculate the net realizable value of accounts receivable.

Here’s the SOLUTION

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