Mehl Wholesalers Co. has been expanding faster than it can raise capital. According to its local banker, the company has reached its debt ceiling. Mehl’s suppliers (creditors)
are demanding payment within 30 days of the invoice date for goods acquired, but Mehl’s customers are slow in paying (60–90 days). As a result, Mehl has a cash fl ow problem.
Mehl needs $120,000 in cash to safely cover next Friday’s payroll. Its balance of outstanding accounts receivables totals $750,000. What might Mehl do to alleviate this cash crunch? Record the entry that Mehl would make when it raises the needed cash.