1. Following is the financial situation of Formosa Wholesale Ltd. in Taipei, Taiwan. (Currency in new Taiwan dollar, NT$)

• Formosa has been expanding faster than it can raise capital. According to its local banker, the company has reached its debt ceiling.
• Formosas suppliers (creditors) are demanding payment within 30 days of the invoice date for goods acquired, but Formosas customers are slow in paying (6090 days). As a result, Formosa has a cash flow problem.
• Formosa needs NT$1,200,000 in cash to safely cover next Fridays payroll. Its balance of outstanding accounts receivables totals NT$7,500,000.
• To alleviate this cash crunch, the company sells NT$1,250,000 of its receivables on September 7, 2020. Formosa is charged a 1% service charge on this sale.

Instruction: Record the entry that Formosa would make when it secures cash by

selling the receivables of NT$1,250,000.