Accounting for Receivables

On May 2, McLain Company lends $9,000 to Chang, Inc., issuing a 6-month, 9% not. at the maturity date, November 2, Chang indicates that it cannot pay.

Instructions

  1. Prepare the entry to record the issuance of the note.
  2. Prepare the entry to record the dishonor of the note, assuming that McLain Company expects collection will occur.
  3. Prepare the entry to record the dishonor of the note, assuming that McLain Company does not expect collection in the future.

Kerwick Company had accounts receivable of $100,000 on January 1, 2020. the only transactions that affected accounts receivable during 2020 were net credit sales of $1,000,000, cash collections of $920,000, and accounts written off of $30,000.

Instructions

  1. Compute the ending balance of accounts receivable.
  2. Compute the accounts receivable turnover for 2020.
  3. Compute the average collection period in days.

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