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1. On December 31, 2007, when its Allowance for Doubtful Accounts had a debit balance of $1,000, North Star Co. estimates that 9% of its accounts receivable balance of $70,000 will become uncollectible and records the necessary adjustment to the Allowance for Doubtful Accounts. On May 11, 2008, North Star Co. determined that J. Tory’s account was uncollectible and wrote off $1,200. On June 12, 2008, Tory paid the amount previously written off.
Prepare the journal entries on December 31, 2007, May 11, 2008, and June 12, 2008.
2. Great Plains Supply Co. has the following transactions related to notes receivable during the last 2 months of the year.
Nov. 1 Loaned $30,000 cash to B. Wedunn on a 1-year, 8% note.
Dec. 11 Sold goods to R. P. Meier, Inc., receiving a $3,600, 90-day, 7% note.
16 Received an $8,000, 6-month, 9% note to settle an open account from M. Fong.
31 Accrued interest revenue on all notes receivable.
Journalize the transactions for Great Plains Supply Co.