Accounting for Receivables

Problem-15: Accounting for Receivables

Presented below are two independent situations.
  1. On March 3, Kitselman Appliances sells $650,000 of its receivables to Ervay Factors Inc. Ervay Factors assesses a finance charge of 3% of the amount of receivables sold. Prepare the entry on Kitselman Appliances books to record the sale of the receivables.
  2. On May 10, Fillmore Company sold merchandise for $3,000 and accepted the custoemr's America Bank MasterCard. America Bank charges a 4% service charge for credit card sales. Prepare the entry on Fillmore Company's books to record the sale of merchandise.

Solution

a.
Kitselman Appliances
Journal Entry
 
b.
Fillmore Company
Journal Entry

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Minhajur Rahaman

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Completing the Accounting Cycle  Adjusting the Accounts  Accounting for Merchandising Operations  The Recording Process  Accounting in Action  Inventories  Plant Assets, Natural Resources, and Intangible Assets  Accounting for Receivables  Accounting Information Systems  Corporations: Dividends, Retained Earnings, and Income Reporting  Current Liabilities and Payroll Accounting  Job Order Costing  Sets  Long-Term Liabilities  Corporations: Organization and Capital Stock Transactions