Richter Company, Which Has a December 31 Year End, and Uses

question 57

Essay

Richter Company, which has a December 31 year end, and uses a periodic inventory system, completed the following transactions during 2018 and 2019:
2018
Oct. 14 Sold merchandise to Bruce Company, receiving a 60-day, 9% note for $4,000.
Nov. 16 Sold merchandise to Marine Company receiving a 72-day, 8% note for $6,500.
Dec. 13 Received amount due from Bruce Company.
Dec. 31 Accrued interest on the Marine Company note.
2019
Jan. 27 Collected in full from Marine Company.
Prepare the necessary journal entries to record the above transactions.

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Definitions:

Dishonored Note

A promissory note that has not been paid by the issuer at the time of its due date.

Fully Paid

Fully Paid denotes a status where all required payments for a service or product have been completed, with no outstanding amounts due.

Allowance Account

An accounting provision used to create a reserve for accounts receivable that may not be collected in full.

Doubtful Accounts

Accounts receivable that a company believes might become uncollectible in the future, leading to potential losses.