The Following Series of Transactions Occurred During Year 1 and Year

question 113

Essay

The following series of transactions occurred during Year 1 and Year 2, when Foxworth
Co. sold merchandise to Kevin Lewis. Foxworth's annual accounting period ends on December 31.
10/01/Yr 1 Sold $12,000 of merchandise to K. Lewis, terms 2/10, n/30.
11/15/Yr 1 Lewis reports that he cannot pay the account until early next year. He agrees to exchange the account for a 120-day, 12% note receivable.
12/31/Yr 1 Prepared the adjusting journal entry to record accrued interest on the note.
03/15/Yr 2 Foxworth receives a check from Lewis for the maturity value (with interest) of the note. 03/22/Yr 2 Foxworth receives notification that Lewis' check is being returned for nonsufficient funds (NSF).
12/31/Yr 2 Foxworth writes off Lewis' account as uncollectible.
Prepare Foxworth Co.'s journal entries to record the above transactions. The company uses the
allowance method to account for its bad debt expense.

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Definitions:

Inner Ear

The innermost portion of the ear, containing the cochlea, the vestibular sacs, and the semicircular canals.

Eardrum

A thin membrane that separates the outer ear from the middle ear and vibrates in response to sound waves.

Olfactory Neurons

Sensory cells located in the nasal cavity that are responsible for the detection of odor molecules, leading to the sense of smell.

Human Olfactory System

Pertains to the bodily structures and processes involved in the sense of smell in humans.