Reference no: EM132496355

Question 1.-Lender Company incurred the following transactions in February:

2/20 Accepted a $30000, 60-day 7.2% note as extension of Late Company's overdue accounts receivable.

2/24 Loaned $40000 to Borrower Company in exchange for a 50-day 11.7% note .

2/25 Loaned $45000 to related Company in exchange for a 45-day 4% note.

a. Record the preceding transactions for Lender Company assuming it uses the 360 day convention.

b. Record adjusting entries February 28th and March 31st.

c. Record the journal entries at maturity.

Question 2.

a. Tree Company had 201X credit sales of $2250000 and cash sales of $500000. At year end, Tree Co's accounts receivable balance was $330000 and the allowance for doubtful accounts had a $2000debit balance.

b. Show the balance sheet presentation for parts i and iii.

i. Tree Co estimates 2.5% of credit sales are uncollectible

ii. Tree Co estimates 1.5% of total sales are uncollectible

iii. Tree Co estimates 6% of accounts receivable are uncollectible.