Question
Presented below is the information related to Dog# Inc., which sells merchandise with terms 2/10, net 60. Dog# Inc. records its sales and receivables net.
Presented below is the information related to Dog# Inc., which sells merchandise with terms 2/10, net 60. Dog# Inc. records its sales and receivables net.
July 1 Dog# Inc. sold to Kennel Corp. merchandise having a value of $62,000.
July 5 Accounts receivable of $85,000 (gross) are factored with Green Tree Credit without recourse at a financing charge of 10%. Cash is received for the proceeds; collections are handled by the finance company. (These accounts were all past the discount period).
July 9 Specific accounts receivable of $100,000 (gross) are pledged to Cash Warehouse Inc. as security for a loan of $40,000 at a finance charge of 8% of the amount of the loan. The finance company will make the collections. (All the accounts receivable are past the discount period.)
December 30 Kennel Corp. notifies Dog# Inc. that it is bankrupt and will pay only 10% of its account. Give the entry to write-off the uncollectable balance using the allowance method. (Note: First record the increase in the receivable on July 11 when the discount period passed.)
Required: Prepare all necessary entries in general journal form for Dog# Inc.
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