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Presented below is information related to Whispering Corp., which sells merchandise with terms 2/10, net 60. Whispering Corp. records its sales and receivables net. July
Presented below is information related to Whispering Corp., which sells merchandise with terms 2/10, net 60. Whispering Corp. records its sales and receivables net.
July 1 | Whispering Corp. sold to Warren Harding Co. merchandise having a sales price of $18,000. | |
5 | Accounts receivable of $13,600 (gross) are factored with Andrew Jackson Credit Corp. without recourse at a financing charge of 9%. Cash is received for the proceeds; collections are handled by the finance company. (These accounts were all past the discount period.) | |
9 | Specific accounts receivable of $13,600 (gross) are pledged to Alf Landon Credit Corp. as security for a loan of $6,800 at a finance charge of 7% of the amount of the loan. The finance company will make the collections. (All the accounts receivable are past the discount period.) | |
Dec. 29 | Warren Harding Co. notifies Whispering that it is bankrupt and will pay only 20% 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.) |
Prepare all necessary entries in general journal form for Whispering Corp.
7/5 (To record discount forfeited) 719 (To record notes payable)Step by Step Solution
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