Preparing general journal adjusting entries: 1. The annual provision for bad deb
ID: 2646582 • Letter: P
Question
Preparing general journal adjusting entries:
1. The annual provision for bad debt is recorded as 5% of ending A/R (317,420). Use the allowance method. Round to thenearest $1.
2. The interest revenue accrued to Dec. 31 of this year on notes receivable is composed of the following:
ben Kenobi, Inc. $3,250
Yoda, Inc. 92
R2D2 Computers 91
3. Interest has accrued at 6.5% on the long-term notes payable (1,200,000) since July 1 of this year.
4.The sic month interest payment on the bonds payable (500,000) is due Jan. 3 of next year for the si-month period ended on Dec. 31 of this year. The stated (coupon) rate of interest is 10% annually. The market (yield -to-maturity) rate of interest is 12% annually. THere were 10 years to maturity at June 30th of this year(the last interest payment date). The bonds are semi-annual. Record interest expense and discount amortization at Dec. 31.
Explanation / Answer
Journal Entries Accounts Debit Credit 1 Bad debts Expenses $ 15,871 Allowance for Doubtful Accounts $ 15,871 (Being Provision made for bad debts = $317420*5% =$15871 ) 2 Accrued Interest Income $ 3,433 Interest Income $ 3,433 (Being interest income recongnised on notes Receivables =3250+92+91 = 3433) 3 Interest expense $ 39,000 Interest payable $ 39,000 (Being interest expense recongnised on notes payable =1200000*6.5%*6/12)