## Practice Problems

### Demonstration problem

#### Demonstration problem A

a.

 1. 2010 31 Uncollectible Accounts Expense (-SE) 11,250 Dec. Allowance for Uncollectible Accounts (-A) 11,250 To record estimated Uncollectible accounts for the year. 2. 2011 15 Allowance for Uncollectible Accounts (+A) 750 Jan. Accounts Receivable-John Nunn (-A) 750 To write off the account of John Nunn as Uncollectible. 3. 12 Accounts Receivable-John Nunn (+A) 750 Allowance for Uncollectible Accounts (-A) 750 To correct the write-off of John Nunn's account on January 5. Feb. 12 Cash (+A) 750 Accounts Receivable-John Nunn (-A) 750 To record the collection of John Nunn's account receivable.

b.

 1. 2010 15 Notes Receivable (+A) 22,500 June Accounts Receivable-Stone Company (-A) 22,500 To record receipt of a note from Stone Company. 2. Sept. 13 Accounts Receivable-Stone Company (+A) 23,175 Notes Receivable (-A) 22,500 Interest Revenue (+SE) 675 To record the default of the Stone Company note of $22,500. Interest revenue was$ 675. 13 Allowance for Uncollectible Accounts* (+A) 23,175 Accounts Receivable-Stone Company (-A) 23,175 To write off the Stone Company as uncollectible.

*This debt assumes that Notes Receivable were taken into consideration when an allowance was established. If not, the debit should be to Loss from Dishonored Notes Receivable.

#### Demonstration problem B

a.

 2009 1 Cash (+A) 9,883.33 Dec. Bank Discount ($10,000 x 0.07 X 101 / 36) (+A) 116.67 Notes Payable (+L) 10,000.00 31 Interest Expense (-SE) 58.33 Bank Discount (-A) 58.33 ($ 10,000 X 0.07 X ^/ 36) 2010 30 Notes Payable (-L) 10,000.00 Jan. Interest Expense (-SE) 58.33 Bank Discount (-A) 58.33 Cash (-A) 10,000.00

b.

 2010 2 Equipment (+A) 5,000.00 Feb 4 Notes Payable (+L) 5,000.00 Mar 2 Notes Payable (-L) 5,000.00 6 Interest Expense (-SE) 37.5 Cash (-A) ($5,000 X 0.09 X 30/360)=$37.50 5,037.50 675