The following series of transactions occurred during Year 1 and Year 2, when Foxworth Co. sold merchandise to Kevin Lewis. Foxworth's annual accounting period ends on December 31. 10/01/Yr 1Sold $12,000 of merchandise to K. Lewis, terms n/30.11/15/Yr 1Lewis reports that he cannot pay the account until early next year. He agrees to exchange the account for a 120-day, 12% note receivable.12/31/Yr 1Prepared the adjusting journal entry to record accrued interest on the note.03/15/Yr 2Foxworth receives a check from Lewis for the maturity value (with interest) of the note.03/22/Yr 2Foxworth receives notification that Lewis' check is being returned for nonsufficient funds (NSF).12/31/Yr 2Foxworth writes off Lewis' account as uncollectible.Prepare Foxworth Co.'s journal entries to record the
above transactions. The company uses the allowance method to account for its bad debt expense.
What will be an ideal response?
| Year 1 | ? | ? | ? |
| Oct. 1 | Accounts Receivable-Lewis | 12,000 | ? |
| ? | Sales | ? | 12,000 |
| ? | ? | ? | ? |
| Nov. 15 | Notes Receivable | 12,000 | ? |
| ? | Accounts Receivable-Lewis | ? | 12,000 ? |
| Dec. 31 | Interest Receivable | 184 | ? |
| ? | Interest Revenue | ? | 184 |
| ? | $12,000 * .12 * (46/360) = $184 | ? | ? |
| Year 2 | ? | ? | ? |
| Mar. 15 | Cash | 12,480 | ? |
| ? | Notes Receivable | ? | 12,000 |
| ? | Interest Receivable | ? | 184 |
| Interest Revenue | ? | 296 | |
| ? | $12,000 * .12 * (74/360) = $296 | ? | ? |
| Mar. 22 | Accounts Receivable-Lewis | 12,480 | ? |
| ? | Cash | ? | 12,480 ? |
| Dec. 31 | Allowance for Doubtful Accounts | 12,480 | ? |
| ? | Accounts Receivable-Lewis | ? | 12,480 |
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