Question

Weldon Corporation’s fiscal year ends December 31. The following is a list of transactions involving receivables that occurred during 2024: March 17 Accounts receivable of $2,300 were written off as uncollectible. The company uses the allowance method. March 30 Loaned an officer of the company $30,000 and received a note requiring principal and interest at 5% to be paid on March 30, 2025. May 30 Discounted the $30,000 note at a local bank. The bank’s discount rate is 6%. The note was discounted without recourse and the sale criteria are met. June 30 Sold merchandise to the Blankenship Company for $18,000. Terms of the sale are 2/10, n/30. Weldon uses the gross method to account for cash discounts. July 8 The Blankenship Company paid its account in full. August 31 Sold stock in a nonpublic company with a book value of $5,600 and accepted a $6,600 noninterest-bearing note with a discount rate of 6%. The $6,600 payment is due on February 28, 2025. The stock has no ready market value. December 31 Weldon estimates that the allowance for uncollectible accounts should have a balance in it at year-end equal to 2% of the gross accounts receivable balance of $850,000. The allowance had a balance of $18,000 at the start of 2024.

Required: 1 & 2. Prepare journal entries for each of the above transactions and additional year-end adjusting entries indicated.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations and round your final answers to nearest whole dollar.

Answer 1

To set up a T-account balance sheet for the bank, list the assets and liabilities. Calculate the net worth by subtracting the liabilities from the assets. The bank's net worth is $220.

Step-by-step explanation:

To set up a T-account balance sheet for the bank, we need to list the assets and liabilities of the bank:

Assets:

• Reserves: $50
• Government bonds: $70
• Loans: $500

Liabilities:

• Deposits: $400

To calculate the bank's net worth, we subtract the liabilities from the assets:

Net Worth = Assets - Liabilities = ($50 + $70 + $500) - $400 = $220