* Selling and pledging accounts receivable 

On July 31, Konrad International had $125,900 of accounts receivable. Prepare journal entries to record the following August transactions. Also, prepare any footnotes to the August 31 financial statements that should be reported as a result of these transactions. 

2014 

Aug.2- Sold merchandise to customers on credit, $6,295. Cost of sales was $3,150. 

7- Sold $18,770 of accounts receivable to Fidelity Bank. Fidelity charges a 1.5% fee. 15- Received payments from customers, $3,436. 25- Borrowed $10,000 from Fidelity Bank, pledging $14,000 of accounts receivable as security for the loan.