Cairo Co Uses the Allowance Method of Accounting for Uncollectible Accounts

question 71

Essay

Cairo Co. uses the allowance method of accounting for uncollectible accounts. Cairo Co. accepted a $5,000, 12%, 90-day note dated May 16, from Alexandria Co. in exchange for its past-due account receivable. Make the necessary general journal entries for Cairo Co. on May 16 and the August 14 maturity date, assuming that the:
a. Note is held until maturity and collected in full at that time.
b. Note is dishonored; the amount of the note and its interest are written off as uncollectible.

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Definitions:

Transgression

A geological event where sea levels rise relative to the land, causing marine waters to spread over the continent and depositing marine sediments.

Regression

A geological process by which areas of submerged seafloor are exposed above sea level, often due to sea-level fall or land uplift.

Shale

A fine-grained sedimentary rock formed from clay and mud, characterized by its ability to split into thin layers along natural fractures.

Sandstone

A sedimentary rock consisting of sand particles bonded together by natural cements such as silica or calcium carbonate.