2.18 Accounting 211 - Accounting 211 Thursday February 18th...

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Accounting 211 Thursday, February 18th, 1999 Announcements: none Lecture notes: Example: Refer back to problem on 2/16/99: During 1998 it is determined that customer A is unable to pay the $500 due to the NL Corporation. Allowances for Uncollectable Accounts 500 Accounts Receivable 500 *NO CHANGE in Net Accounts Receivable 12/1/98 The NL corporation received a 3 month note for $10,000 from a customer for the sale if merchandise. The Interest Rate = 12%
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Notes Receivable 10,000 Sales 10,000 12/31/98 Recognize the Interest earned to date.
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Interest Receivable 100 Interest Income 100 3/1/99
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Cash 10,300 Notes Receivable 10,000 Interest Receivable 100 Interest Income 200
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Example: A computer costing $8,000 was purchased on 9/1/98 (cash was paid). The following (incorrect) Journal Entry was made. What were the errors that resulted? Computer Supplies Expense 8,000 Cash 8,000 Income Statement Expenses too high, Net Income too low 12/31/98 Balance Sheet Assets too low, SE too low Page 364, Problem A2 d.
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Allowance for Uncollectable Accounts 19,800 Accounts Receivable 19,800 e.
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