Question

Knowledge Check 01 On March 15, Viking Office Supply agrees to accept $1,200 in cash along with a $2,800, 60-day, 15 percent note from one of its customers to settle his $4,000 past-due account. Prepare the March 15 entry for Viking Office Supply by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.

Answer 1

Answer:

Viking Office Supply

Debit Accounts Receivable $4,000

Credit Allowance for Uncollectible Accounts $4,000

To revise the write-off of past-due account.

Debit Cash Account $1,200

Debit 15% Notes Receivable $2,800

Credit Accounts Receivable $4,000

To record the cash receipt and notes settlement.

Explanation:

Since the account is past-due, it must have been written off as uncollectible expense.  To revise this entry, a credit is made to the Allowance for Uncollectible Accounts and a debit to the Accounts Receivable.

Then a debit to the Cash Account in the sum of $1,200 and a debit to the Notes Receivable account for $2,800 and a credit to the Accounts Receivable.