Exercise 7-12 Presented below is information related to James Garfield Corp. Pre
ID: 2458753 • Letter: E
Question
Exercise 7-12
Presented below is information related to James Garfield Corp.
Prepare all necessary entries in general journal form for Garfield Corp. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)
Date
Account Titles and Explanation
Debit
Credit
7/1
7/5
7/9
(To record discount forfeited)
7/9
7/11
12/29
July 1 James Garfield Corp. sold to Warren Harding Co. merchandise having a sales price of $14,000 with terms 2/10, net/60. Garfield records its sales and receivables net. 5 Accounts receivable of $14,600 (gross) are factored with Andrew Jackson Credit Corp. without recourse at a financing charge of 9%. Cash is received for the proceeds; collections are handled by the finance company. (These accounts were all past the discount period.) 9 Specific accounts receivable of $14,600 (gross) are pledged to Alf Landon Credit Corp. as security for a loan of $6,900 at a finance charge of 7% of the amount of the loan. The finance company will make the collections. (All the accounts receivable are past the discount period.) Dec. 29 Warren Harding Co. notifies Garfield that it is bankrupt and will pay only 10% of its account. Give the entry to write off the uncollectible balance using the allowance method. (Note: First record the increase in the receivable on July 11 when the discount period passed.)Explanation / Answer
Date
Account Titles and Explanation
Debit
Credit
7/1
Accounts Receivable
14000
Sales Revenue
14000
7/5
Cash
13286
Finance charge
1314
Account Receivable
14600
7/9
Security
6900
Finance charge
483
Account receivable
7383
7/9
Discount forfeited
7217
Account receivable
7217
7/11
No Entry
12/29
Bad debt
12600
Cash
1400
Account receivable
14000
Date
Account Titles and Explanation
Debit
Credit
7/1
Accounts Receivable
14000
Sales Revenue
14000
7/5
Cash
13286
Finance charge
1314
Account Receivable
14600
7/9
Security
6900
Finance charge
483
Account receivable
7383
7/9
Discount forfeited
7217
Account receivable
7217
7/11
No Entry
12/29
Bad debt
12600
Cash
1400
Account receivable
14000
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