These transactions took place for Covington Corporation which has a December 31 fiscal year end. Covington does not maintain a separate Allowance for Doubtful Notes Receivable account. 2017 May 1 Received a $4,800, 1-year, 8% note in exchange for an outstanding account receivable from S. Dolan. Interest is due at the maturity of the note. Nov. 1 Loaned $61,200 cash to B. Younger on a 4 month, 9% note. Interest is due at the end of each month. Nov. 30 Received the interest due from B. Younger. Dec. 31 Received the interest due from B. Younger. Dec. 31 Accrued interest revenue on notes receivable.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
These transactions took place for Covington Corporation which has a December 31 fiscal year end. Covington does not maintain a separate Allowance for Doubtful Notes Receivable account.
| 2017 | ||
| May 1 | Received a $4,800, 1-year, 8% note in exchange for an outstanding account receivable from S. Dolan. Interest is due at the maturity of the note. | |
| Nov. 1 | Loaned $61,200 cash to B. Younger on a 4 month, 9% note. Interest is due at the end of each month. | |
| Nov. 30 | Received the interest due from B. Younger. | |
| Dec. 31 | Received the interest due from B. Younger. | |
| Dec. 31 | Accrued interest revenue on notes receivable. | |
| 2018 | ||
| Jan. 31 | Received the interest due from B. Younger. Younger also repaid 75% of the principal balance owing on the note at this time. | |
| Feb. 28 | Wrote off the balance of the B. Younger note as Younger has defaulted. Future payments are not expected. The interest due for the month of February was not collected. | |
| May 1 | Received principal plus interest on the S. Dolan note. (No further interest has been accrued since December 31, 2017.) |
Record Covington’s transactions in a general journal. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record
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