Problem 8-5
July 1 Accounts receivable – assigned 500 000
Accounts receivable 500 000
Cash 390 000
Service charge 10 000
Note payable – bank 400 000
Aug 1 Cash 330 000
Accounts receivable – assigned 330 000
Note payable – bank 326 000
Interest expense (400 000 x 1%) 4 000
Cash 330 000
Sept 1 Cash 170 000
Accounts receivable – assigned 170 000
Note payable – bank 70 000
Interest expense ( 000 x 1%) 4 000
Cash 000
Problem 8-6
Dec. 1 Accounts receivable – assigned 1 500 000
Accounts receivable 1 500 000
Cash 1 250 000
Service charge 50 000
Note payable – bank 1 300 000
31 Cash 970 000
Sales discount 30 000
Accounts receivable – assigned 1 000 000
31 Note payable – bank 957 000
Interest expense (1 300 000 x 1%) 13 000
Cash 970 000
Problem 8-7
Jul 1 Accounts receivable – assigned 800 000
Accounts receivable 800 000
Cash 616 000
Service charge 24 000
Notes payable – bank 640 000
Aug 1 Note payable – bank 413 600
Interest expense (640 000 x 1%) 6 400
Accounts receivable – assigned 420 000
Loan from bank 640 000
Less: August collection by bank 413 600
Balance due the bank 226 400
September collection by bank 320 000
Less: Loan balance 226 400
Interest (226 400 x 1%) 2 264 228 664
Remittance from bank 91 336
Sept 1 Cash 91 336
Interest expense (226 400 x 1%) 2 264
Note payable – bank 226 400
Accounts receivable – assigned 320 000
Problem 8-8
Accounts receivable 6 000 000
Factor’s holdback (6 000 000 x 10%) (600 000)
Commission (6 000 000 x 15%) (900 000)
Cash received from factoring 4 500 000
Accounts receivable 6 000 000
Commission (6 000 000 x 15%) (900 000)
Net sales price 5 100 000
Carrying amount of A/R 5 800 000
Total loss on factoring (700 000)
Cash 4 500 000
Receivable from factor 600 000
Allowance for doubtful accounts 200 000
Loss from factoring 700 000
Accounts receivable 6 000 000
Problem 8-9
Gross amount 800 000
Less: Factor’s holdback (800 000 x 10%) (80 000)
Factoring fee (800 000 x 5%) (40 000) 120 000
Cash received from factoring 680 000
Jul 1 Cash 680 000
Receivable from factor 80 000
Factoring fee 40 000
Accounts receivable 800 000
Jul 15 Sales return and allowance 20 000
Receivable from factor 20 000
Cash (80 000 – 20 000) 60 000
Receivable from factor 60 000
Problem 8-10
Gross amount 500 000
Less: Factor’s holdback (500 000 x 25%) (125 000)
Commission (500 000 x 5%) (25 000)
Sales discount (500 000 x 2%) (10 000) 160 000
Cash received from factoring 340 000
Jun 1 Accounts receivable 500 000
Sale 500 000
Jun 3 Cash 340 000
Receivable from factor 125 000
Commission 25 000
Sales discount 10 000
Accounts receivable 500 000
Jun 9 Sales return and allowance 50 000
Sales discount (50 000 x 2%) 1 000
Receivable from factor 49 000
Jun 11 no entry
Jun 15 Cash (125 000 - 49 000) 76 000
Receivable from factor 76 000
