Jane Co has the following accounts in its general ledger on March 31. Accounts Receivable $10,000 and Allowance for Doubtful Accounts $1,000. During April, the following transactions occurred

April 5 Sold $5000 of accounts receivables to Factors-R-Us who assesses a 2% finance charge

April 25 Made $500 of Visa credit card sales. Credit card service charge is 3%

What are the journal entries?

April 5 since we are SELLING accounts receivable we know we will have to get this amount off accounts receivable with a CREDIT.

What is the Debit? We got in CASH however, we dont get to debit the whole $5000 because of the Finance Charge. So 2% x $5000=$100. Cash 4900, Service Charge Expense $100.

April 25 Whenever we have a sale, we get to CREDIT Sales Revenue. What is the Debit? We still get to DEBIT Cash because the VISA company gives us cash, but they take out their 3%. $500 x 3% = $15. Cash = $485 and Service Charge Expense = $15.