Question

Presented below is information related to Riverbed Corp., which sells merchandise with terms 2/10, net 60. Riverbed Corp. records its sales and receivables net July 1 Riverbed Corp. sold to Warren Harding Co. merchandise having a sales price of $15,000. 5 Accounts receivable of $12,300 (gross) are factored with Andrew Jackson Credit Corp. without recourse at a financing charge of 8%. Cash is received for the proceeds: collections are handled by the finance company. (These accounts were all past the discount period.) 9 Specific accounts receivable of $12,300 (gross) are pledged to Alf Landon Credit Corp. as security for a loan of $6,600 at a finance charge of 6% of the amount of the loan. The finance company will make the collections. (All the accounts receivable are past the discount period.) Dec. 29 Warren Harding Co. notifies Riverbed that it is bankrupt and will pay only 20% of its account. Give the entry to write off the uncollectible balance using the allowance method. (Note: First record the increase in the receivable on July 11 when the discount period passed.) Prepare all necessary entries in general journal form for Riverbed Corp. (If no entry is required, select "No Entry" for the account titles and enter for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit 7/5 (To record discount forfeited) 7/9 (To record notes payable)

Answer 1

Credit Debit $ 14,700 Date Account Titles and Explanation 01-Jul Accounts Receivable-Warren Harding Co. Sales Revenue ($15,000*(100%-2%)] (To record the sales on account) $ 14,700 $ 11,316 $ 984 05-Jul Cash ($12,300*(100%-8%)] Loss on sales of receivable ($12,300*8%) Accounts Receivable (12300*98%) Sales discount forfeited ($12,300*2%) (To record the accounts receivable factored) $ 12,054 $ 246 $ 246 09-Jul Accounts Receivables ($12,300*2%) Sales discount forfeited (To record discount forfeited) $ 246 $ $ 6,204 396 09-Jul Cash ($6,600*(100%-6%)] Interest Expense ($6,600*6%) Notes Payable (To record notes payable) $ 6,600 300 11-Jul Accounts receivable-Warren Harding company Sales discount forfeited ($15,000*2%) (To record discount forfeited) $ 300 $ 12,000 29-Dec Allowance for doubtful Accounts ($15,000*(100%-20%)] Accounts Receivable-Warren Harding Co. (To record the accounts written off) $ 12,000