Jordan Co. uses the allowance method of accounting for uncollectible accounts. Jordan Co. accepted a $5,000, 12%, 90-day note dated May 16, from Beckam Co. in exchange for its past-due account receivable. Make the necessary general journal entries for Jordan Co. on May 16 and the August 14 maturity date, assuming that the: a. Note is held until maturity and collected in full at that time.b. Note is dishonored; the amount of the note and its interest are written off as uncollectible.
What will be an ideal response?
| a. | May 16 | Notes Receivable | 5,000 | ? |
| ? | ? | Accounts Receivable-Beckham | ? | 5,000 |
| ? | Aug. 14 | Cash | 5,150 | ? |
| ? | ? | Notes Receivable | ? | 5,000 |
| ? | ? | Interest Revenue ($5,000 * .12 * 90/360) | ? | 150 |
| b. | May 16 | Notes Receivable | 5,000 | ? |
| ? | ? | Accounts Receivable-Beckham | ? | 5,000 |
| ? | Aug. 14 | Accounts Receivable-Beckham | 5,150 | ? |
| ? | ? | Notes Receivable | ? | 5,000 |
| ? | ? | Interest Revenue | ? | 150 |
| ? | Aug. 14 | Allowance for Doubtful Accounts | 5,150 | ? |
| ? | ? | Accounts Receivable-Beckham | ? | 5,150 |
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