52/112.Jervis sells $75,000 of its accounts receivable to Northern Bank in order
ID: 2570912 • Letter: 5
Question
52/112.Jervis sells $75,000 of its accounts receivable to Northern Bank in order to obtain necessary cash. Northern Bank charges a 5% factoring fee. What entry should Jervis make on to record the transaction? A. Debit Cash $71,250; debit Factoring Fee Expense $3,750; credit Accounts Receivable $75,000 B. Debit Accounts Receivable $71,250; debit Factoring Fee Expense $3,750; credit Cash $75,000 C. Debit Cash $75,000; credit Factoring Fee Expense $3,750; credit Accounts Receivable $75,000 D. Debit Cash $71,250; credit Accounts Receivable $71,250 E. Debit Accounts Receivable $75,000; credit Factoring Fee Expense $3,750; credit Cash $71,250 53/113.Jervis accepts all major bank credit cards, including those issued by Northern Bank (NB), which assesses a 3% charge on sales for using its card. On June 28, Jervis had $3,500 in NB Card credit sales. What entry should Jervis make on June 28 to record the deposit? A. Debit Cash $3,500; credit Sales $3,500 B. Debit Accounts Receivable $3,500; credit Sales $3,500 C. Debit Cash $3,605; credit Credit Card Expense $105; credit Sales $3,500 D. Debit Cash $3,395; debit Credit Card Expense $105; credit Sales $3,500 E. Debit Accounts Receivable $3,395; debit Credit Card Expense $105; credit Sales $3,500 54/114. Brinker accepts all major bank credit cards, including First Savings Banks, which assesses a 2.5% charge on sales for using its card. On May 26, Brinker had $4,800 in First Savings Bank Card credit sales. What entry should Brinker make on May 26 to record the deposit? A. Debit Accounts Receivable $4,800; credit Sales $4,800. B. Debit Cash $4,680; debit Credit Card Expense $120; credit Sales $4,800. C. Debit Cash $4,800; credit Sales $4,800 D. Debit Cash $4,920; credit Credit Card Expense $120; credit Sales $4,800. E. Debit Accounts Receivable $4,680; debit Credit Card Expense $120; credit Sales $4,800.Explanation / Answer
52/112
Answer is (a)
Since accounts receivable are being liquidated, they will be credited by full amount.
5% fees is charged for factoring. As such this is an expense and would be debited
Balance of accounts receivable after reducing factoring fees would be paid by the bank. Hence, cash would be debited.
52/113
Answer is (d)
Bank credit card sales are treated as cash sales. Hence cash would be debited with the amount received after levying credit card charges on sales amount.
Credit card charges are expenses and hence would be debited.
Sales would be recorded with full value.
52/114
Answer is (b)
Reasons same as 52/113
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