Presented below is information related to Bonita Corp., which sells merchandise

Question

Presented below is information related to Bonita Corp., which sells merchandise with terms 2/10, net/60. Bonita Corp. records its sales and receivables net.

Prepare all necessary entries in general journal form for Bonita 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

7/5

(To record discount forfeited)

7/9

(To record notes payable)

July 1 Bonita Corp. sold to Warren Harding Co. merchandise having a sales price of $13,000. July 5 Accounts receivable of $15,000 (gross) are factored with Andrew Jackson Credit Corp. without recourse at a financing charge of 8%. Cash is received for the proceeds; collections are handled by the finance company. (These accounts were all past the discount period.) July 9 Specific accounts receivable of $15,000 (gross) are pledged to Alf Landon Credit Corp. as security for a loan of $6,400 at a finance charge of 6% 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 Bonita 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

1-Jul Accounts receivable-Warren Harding Co. (13000*98%) 12740 Sales revenue 12740 5-Jul Cash [15000*(1-0.08)] 13800 Loss on sale of receivables 1200 Accounts receivable (15000*98%) 14700 Sales discounts forfeited 300 Note: It is presumed the company has not forfeited the discount earlier. If it has already forfeited the discount, the creidt would be only to Accounts receivable for 15000) 9-Jul Accounts receivable (15000*2%) 300 Sales discounts forfeited 300 Cash 6016 Interest expense (6400*6%) 384 Notes payable 6400 11-Jul Accounts receivable (13000*2%) 260 Sales discounts forfeited 260 29-Dec Allowance for doubful debts (13000*90%) 11700 Accounts receivable 11700

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