Reference no: EM132572468
Revis Flooring has a December 31 year end and uses a perpetual inventory system. The following transactions occurred during 2019 and 2020:
2019
Sept1 Sold goods with a cost of $ 8,250 to Jules Harrison for $ 14,500 on account, terms 2/15, n/30.
Oct1 Jules ran into some financial troubles and reached an agreement with Revis to convert their account receivable of $14,500 into a 6 month, 8% note receivable.
Dec24 Sold goods with a cost of $ 1,420 to Flore Hardy for $ 2,900 on account, terms 2/15, n/30.
Dec31 Prepared necessary adjusting entries related to the Jules note and an estimate of uncollectible accounts receivable of $ 2,750 (based on net credit sales).
2020
Jan2 Collected the amount due from Flore.
Apr1 Jules dishonoured the note receivable. Revis expects to collect the note and interest in the future.
Dec31 Wrote off the amount owing from Jules ( no expectation of future payment ).
Instructions:
Question 1: Prepare all required journal entries for the above transactions assuming Revis uses the allowance method for estimating uncollectible accounts receivable and the Allowance for Doubtful Accounts has a $15,000 credit balance ( before adjustment ) at December 31, 2019.