8. value: 4.30 points Exercise 7-14 Selling and pledging accounts receivable LO

Question

8. value: 4.30 points Exercise 7-14 Selling and pledging accounts receivable LO C3 On June 30, Petrov Co. has $142,800 of accounts receivable. July 4 Sold $6,285 of merchandise (that had cost $4,022) to customers on credit. 9 Sold $19,992 of accounts receivable to Main Bank. Main charges a 4% factoring fee. 17 Received $3,457 cash from customers in payment on their accounts. 27 Borrowed $11,424 cash from Main Bank, pledging $14,851 of accounts receivable as security for the loan. Prepare journal entries to record the above selected July transactions. (The company uses the perpetual inventory system.) (Round your final answers to nearest whole dollar. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 2 3 4 5 6 Sold $6,285 of merchandise to customers on credit. Note: Enter debits before credits. Date General Journal Debit Credit July 04 Record entry Clear entry View general journal

Explanation / Answer

Solution: Date General Journal Debit Credit July 04 Accounts receivable 6,285 Sales 6,285 July 04 Cost of goods sold 4,022 Merchandise inventory 4,022 July 09 Cash 19,192 Factoring fee expense 800 Accounts receivable 19,992 Working Notes: Cash 19,192 [19,992 - 800 = 19,192 net cash received] Factoring fee expense 800 [Accounts receivable x factoring fee] [19,992 x 4% = 799.68 = 800] Accounts receivable 19,992 July 17 Cash 3,457 Accounts receivable 3,457 July 27 Cash 11,424 Notes payable 11,424 Notes: [14,851 accounts receivable is pledged for cash 11,424 to Main bank] July 27 No journal entry required Please feel free to ask if anything about above solution in comment section of the question.

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