The trial balance before adjustment for Kelly Company shows the following balances.

Debits Credits

Accounts Receivable $122,000

Allowance for Doubtful Accounts 4,000

Sales $780,000

Instructions

Using the data above, give the journal entries required to record each of the

following cases. (Each situation is independent.)

1 To obtain additional cash, Kelly factors (sold) without recourse $80,000

of accounts receivable with Easy Finance. The finance charge is 6%

of the amount factored.

2 To obtain a one-year loan of $50,000 ,Kelly assigns

$75,000 of specific receivable accounts to B&C Financial. The finance charge is

5% of the loan; the cash is received and the accounts turned over to B&C Financial.