Question

On June 30, Petrov Co. has $140,800 of accounts receivable.

July 4 Sold $8,075 of merchandise (that had cost $5,168) to customers on credit, terms n/30.
9 Sold $20,398 of accounts receivable to Main Bank. Main charges a 8% factoring fee.
17 Received $4,441 cash from customers in payment on their accounts.
27 Borrowed $11,656 cash from Main Bank, pledging $15,153 of accounts receivable as security for the loan.

Required:
Prepare journal entries to record the above selected July transactions.

Answer 1

July 04

Dr Accounts receivable $8,075

Cr Sales $8,075

July 04

Dr Cost of goods sold $5,168

Cr Merchandise inventory $5,168

July 09

Dr Cash $18,766.16

Dr Factoring fee expense $1,631.84

Cr Accounts receivable $20,398

July 17

Dr Cash $4,441

Cr Accounts receivable $4,441

July 27

Dr Cash $11,656

Cr Notes payable $11,656

July 27

No journal entry

Step-by-step explanation:

Preparation of journal entries to record July transactions.

July 04

Dr Accounts receivable $8,075

Cr Sales $8,075

July 04

Dr Cost of goods sold $5,168

Cr Merchandise inventory $5,168

July 09

Dr Cash $18,766.16

($20,398-$1,631.84)

Dr Factoring fee expense $1,631.84

($20,398*8%)

Cr Accounts receivable $20,398

July 17

Dr Cash $4,441

Cr Accounts receivable $4,441

July 27

Dr Cash $11,656

Cr Notes payable $11,656

July 27

No journal entry