Prepare entries for Zitco on December

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Problem - Ace Company purchases $1,400 of merchandise from Zitco on December 16. Zitco accepts Ace's $1,400, 90-day, 12% note as payment. Zitco's accounting period ends on December 31.

a. Prepare entries for Zitco on December 16 and December 31.

b. Prepare Zitco's March 16 entry if Ace dishonors the note.

c. Instead of the facts in part b, prepare Zitco's March 16 entry if Ace honors the note.

d. Assume the facts in part b (Ace dishonors the note). Then, on March 31, Zitco writes off the receivable from Ace Company. Prepare that write-off entry assuming that Zitco uses the allowance method.

Reference no: EM132849769

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