Question
Information on Motion Corp., which reports under ASPE, follows: July 1 Motion Corp. sold to Oak Company merchandise having a sales price of $9,000, terms
Information on Motion Corp., which reports under ASPE, follows:
July 1 | Motion Corp. sold to Oak Company merchandise having a sales price of $9,000, terms 2/10, n/60. Motion records its sales and receivables net. | |
3 | Oak Company returned defective merchandise having a sales price of $700. | |
5 | Accounts receivable of $19,300 (gross) are factored with Grouper Corp. without recourse at a financing charge of 8%. Cash is received for the proceeds and collections are handled by the finance company. (These accounts were subject to a 3% discount and were all past the discount period.) | |
9 | Specific accounts receivable of $15,500 (gross) are pledged to Landon Credit Corp. as security for a loan of $11,100 at a finance charge of 3% of the loan amount plus 8% interest on the outstanding balance. Motion Corp will continue to make the collections. All the accounts receivable pledged are past the discount period and were originally subject to a 3% discount.
| |
Dec.
| 29 Oak Company notifies Motion that it is bankrupt and will be able to pay only 10% 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.) |
(A) Prepare all necessary journal entries on Motion Corp.s books. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)
Account Title and explanation Debit Credit
Date_____________
__________________
Date_______________
___________________
July 5________________
_____________________
_____________________
_____________________
Date:_____________________
__________________________
(To record sales discount forfeited)
July 9:____________________
_________________________
__________________________
(To record note payable)
Date:_____________
___________________
Date:_______________
___________________
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