Problem 15 Rectification of errors

Problem 15          10 points

An inexperienced accountant made the following entries.  In each case, the date and the explanation to the entry is correct.

Dec. 17   Cash                                                    2,940

               Sales Discount                                          60

                       Accounts Receivable                                    3,000

Dec   20   Cash                                                     20,450

                       Notes Receivable                                          20,000

                       Interest Revenue                                                450

( Collection of $20,000, 9% 90 day note dated Sept. 21.

                    Interest had been accrued through Nov. 30) 

Dec   27    Cash                                                          1,000

                       Bad Debts Expense                                           1,000

( Collection of account previously written off as  uncollectible

under the allowance method)

Dec    31    Bad Debts Expense                                    1,600

                         Allowance for Doubtful Accounts                      1,600

                  (To recognize estimated bad debts based on 2% of net sales of $800,000.)   

INSTRUCTIONS

Prepare the correcting entries or make the entries like it should have been originally made.