Cairo Co

Question 139

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.