Exchange for brick sold to sunset designs

Assignment Help Financial Accounting

Reference no: EM13922424

The Phoenix Brick Yard completed the following transactions. Accounts receivable are valued using the allowance method.

Jun 14 Writes off a $750 account receivable arising from a sale to Southwest Desert Accents that dates to 10 months ago.

Jun 30 Phoenix receives a $1,000, 90-day, 10% note in exchange for brick sold to Sunset Designs. The brick cost $600.

Jul 15 Receives $2,000 cash plus a $10,000 note from Tempe Landscapes in exchange for brick that sells for $12,000. The brick cost $8,000. The note is dated Jul 15, bears 12% interest, and matures in 120 days.

Oct 1 Completed a $200 credit card sale with a 4% fee (the cost of sales is $150). The cash is received immediately from the credit card company.

Oct 3 Sunset Designs refuses to pay the note that was due to Phoenix on September 30. Prepare the journal entry to charge the dishonored note plus accrued interest to Sunset Design's accounts receivable.

Oct 5 Completed a $500 credit card sale with a 5% fee (the cost of sales is $300). The payment from the credit card company is received on Oct 9.

Oct 15 Received the full amount of $750 from Southwest Desert Accents that was previously written off on Jun 14. Record the bad debts recovery.

Nov 13 Received payment of principal plus interest from Tempe Landscapes for the July 15 note.

1.Prepare the necessary journal entries to record these transactions.

2.Prepare an adjusting journal entry as of the end of November (Phoenix Brick Yard's fiscal year-end), assuming bad debts are estimated to be $20,400 by aging accounts receivable. The unadjusted balance of the Allowance for Doubtful Accounts is $1,000 debit.

Reference no: EM13922424

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