Question

On November 30, Petrov Co. has $105,400 of accounts receivable and uses the perpetual inventory system. Dec. 4 Sold $6,505 of merchandise (that had cost $4,163) to customers on credit, terms n/30. 9 Sold $14,756 of accounts receivable to Main Bank. Main charges a 2% factoring fee. 17 Received $3,578 cash from customers in payment on their accounts. 27 Borrowed $8,432 cash from Main Bank, pledging $10,962 of accounts receivable as security for the loan. (1) Prepare journal entries to record the above transactions. (2) Which transaction would most likely require a note to the financial statements?

Answer 1

1)Journal Entries are given below

2) November 27 requires notes to Financial Statements

Step-by-step explanation:

1) Journal Entries :

DEBIT CREDIT

Nov-04 A/C RECEIVABLES 6505

SALES/REVENUE 6505

COST OF GOODS SOLD 4163

INVENTORY 4163

Nov-09 FEE EXPENSE FACTORING 295

CASH 14461

A/C RECEIVABLES 14756

Nov-17 CASH 3578

A/C RECEIVABLES 3578

Nov-27 CASH 8432

NOTES PAYABLES 8432

Nov-27 NO JOURNAL ENTRY REQUIRED

2) NOTES TO FINANCIAL STATEMENTS

AN AMOUNT OF $ 10962 OF A/C Receivable IS PLEDGED AS SECURITY FOR LOAN.