Exercise 9-7 wiley Presented below are two independent situations. On March 3, K

Question

Exercise 9-7 wiley Presented below are two independent situations. On March 3, Kitselman Appliances sells $605,700 of its receivables to Ervay Factors Inc. Ervay Factors assesses a finance charge of 3% of the amount of receivables sold. Prepare the entry on Kitselman Appliances’ books to record the sale of the receivables. 2) On May 10, Fillmore Company sold merchandise for $6,200 and accepted the customer’s America Bank MasterCard. America Bank charges a 4% service charge for credit card sales. Prepare the entry on Fillmore Company’s books to record the sale of merchandise.

Explanation / Answer

1)On march 3

(being sales of $605,700 of its receivables to Ervay Factors Inc. at 3% finance charges.)

2)On may 10

(being sales made through America Bank MasterCard at a 4% service charge.)

Account Debit Credit Finance charge [0.03×605,700] 18,171 Due from Factor 587,529                    Accounts Receivable 605,700

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