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

Answer:

1)Journal Entries are given below

2) November 27 requires notes to Financial Statements    

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.