The following series of transactions occurred during 2014 and 2015 when Linwood Co.sold merchandise to John Moore.Linwood's annual accounting period ends on December 31.
10/01/1411/15/14 12/31/14 03/15/15 03/22/15 12/31/15 Sold $12,000 of merchandise to John Moore, terms 2/10,n/30. Moore reports that he cannot pay the account until early next year. He agrees to exchange the account for a 120-day, 12% note receivable. Prepared the adjusting journal entry to record accrued interest on the note. Linwood receives a check from Moore for the maturity value (with interest) of the note. Linwood receives notification that Moore’s check is being returned for non- sufficient funds (NSF). Linwood writes off Moore’s account as uncollectible.
Prepare Linwood Co.'s journal entries to record the above transactions assuming they use the allowance method of accounting for uncollectible accounts.
Price Maker
A price maker refers to a firm or entity that has enough control over the market to influence the price of its product or service, as opposed to being a price taker who must accept market prices.
Pure Competition
An ideal market scenario where products are identical, information is freely available, and there is free entry and exit of firms, ensuring no individual control over prices.
Allocative Efficiency
The optimal distribution of resources to produce the types of goods and services most desired by society.
Basis for Monopoly
The underlying conditions that enable a firm or entity to become or remain the sole supplier of a good or service, such as control over resources, government regulation, or technology.