Question

On November 30 , Petrov Co. has $117,400 of accounts receivable and uses the perpetual inventory system.

Dec. 4 Sold $9,005 of merchandise (that had cost $5,763) to customers on credit, terms n / 30.

       9 Sold $16,436 of accounts receivable to Main Bank. Main charges a 8% factoring fee.

       17 Received $4,953 cash from customers in payment on their accounts.

       27 Borrowed $9,392 ' cash from Main Bank, pledging $12,210 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

		Debit	Credit
July 04	Accounts receivable	9005
	Sales		9005
July 04	Cost of goods sold	5763
	Merchandise inventory		5763
July 09	Cash	15121
	Factoring fee expense	1315		=16436*8%
	Accounts receivable		16436
July 17	Cash	4953
	Accounts receivable		4953
July 27	Cash	9392
	Notes payable		9392
July 27	No journal entry required
2
The transaction requiring note to financial statement is:
Accounts receivable in the amount of $12,210 are pledged as security for a $9,392 note payable to Main Bank.