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Prepare the correcting entries or make the entries like it should have been originally made.