Answer:
The Journal entries are as follows:
(i) On July 4,
Accounts receivable A/c Dr. $7,245
To sales $7,245
(To record sold merchandise)
(ii) On July 4,
Cost of goods sold A/c Dr. $5,000
To Merchandise inventory $5,000
(To record cost of goods sold)
(iii) On July 9,
Factoring fee expense A/c Dr. $800
Cash A/c Dr. $19,200
To Accounts receivable $20,000
(To record sold accounts receivables)
(iv) On July 17,
Cash A/c Dr. $5,859
To accounts receivables $5,859
(To record cash received from accounts receivables)
(v) On July 27,
Cash A/c Dr. $10,000
To Notes payable $10,000
(To record borrowing from bank)
(vi) No entry for accounts receivable as security for the loan.
