On November 30, Petrov Co. has $137,000 of accounts receivable and uses the perpetual inventory system. Dec. 4 Sold $5,620 of merchandise (that had cost $3,597) to customers on credit, terms n/30. 9 Sold $19,180 of accounts receivable to Main Bank. Main charges a 8% factoring fee. 17 Received $3,091 cash from customers in payment on their accounts. 27 Borrowed $10,960 cash from Main Bank, pledging $14,248 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?

Question

Abdiel Oconnor

Business

21 February, 22:59

On November 30, Petrov Co. has $137,000 of accounts receivable and uses the perpetual inventory system. Dec. 4 Sold $5,620 of merchandise (that had cost $3,597) to customers on credit, terms n/30. 9 Sold $19,180 of accounts receivable to Main Bank. Main charges a 8% factoring fee. 17 Received $3,091 cash from customers in payment on their accounts. 27 Borrowed $10,960 cash from Main Bank, pledging $14,248 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?

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Ansley · Answer 1

Solution:

Date General Journal Debit Credit

July 04 Accounts receivable 5,620

Sales 5,620

July 04 Cost of goods sold 3,597

Merchandise inventory 3,597

July 09 Cash 19,200

Factoring fee expense 800

Accounts receivable 20,000

July 17 Cash $3,091

Accounts receivable $3,091

July 27 Cash 10,960

Notes payable 10,960

July 27 No journal entry required