Corp. is a company that sells bedroom products. The information for the month of November is as
Question:
Corp. is a company that sells bedroom products. The information for the month of November is as follows:
Nov 1 Corp sold merchandise to Ltd. for a sales price of $20,000 [3/10, net/60]. The company used the net method to recognize sales and returns and recognized sales discount forfeited on the 1st day past the discount period.
Nov 2 Izzie Inc. a client previously written off has paid back Corp the $13,000 that it owed in the month of October. Corp used the allowance method to account for bad debt expenses.
Nov 3 A portion of goods purchased by Ltd. on Nov 1 turned out to be defective. Ltd. returned the merchandise with a sales price of $2,500.
Nov 8 Corp factored $6,000 of accounts receivable with recourse at a financing charge of 5%. These accounts receivable were subject to 2% discount and were all past the discount period. (The company has already recorded sales discount forfeited). Assume a recourse liability of $200.
Nov 9 Corp factored another $5,000 of accounts receivable without recourse at a financing charge of 7%. These accounts receivable were subject to 1% discount and were all past the discount period. (The company forgot to record sales discount forfeited).
Nov 15 Corp pledged specific accounts receivable of $1,000 to Bank as security of a loan of $15,000 at finance charge of 5% upfront of the loan amount plus interest of 5% on the outstanding balance when the loan is repaid. Corp will continue to make the collections. All accounts receivable were past due and sales discount forfeited have been recorded already.
Nov 30 Ltd notified Corp that it is bankrupt and will pay only 20% of its account. Hence, Corp needed to write off Ltd’s account. Corp used the allowance method to account for bad debt expenses.
Record each transaction in general journal entry form
Essentials of Business Analytics
ISBN: 978-1285187273
1st edition
Authors: Jeffrey Camm, James Cochran, Michael Fry, Jeffrey Ohlmann, David Anderson, Dennis Sweeney, Thomas Williams