Exercise 7-10 Selling and pledging accounts receivable L.O. C3 On June 30, Roman Co. has $134,000 of accounts receivable. July 4 Sold $7,390 of merchandise (that had cost $4,730) to customers on credit. 9 Sold $18,760 of accounts receivable to Center Bank. Center charges a 4% factoring fee. 17 Received $4,065 cash from customers in payment on their accounts. 27 Borrowed $10,720 cash from Center Bank, pledging $13,936 of accounts receivable as security for the loan. Prepare journal entries to record the above selected July transactions. (The company uses the perpetual inventory system.)

Exercise 7-10 Selling and pledging accounts receivable L.O. C3

On June 30, Roman Co. has $134,000 of accounts receivable.

  

July	4	Sold $7,390 of merchandise (that had cost $4,730) to customers on credit.
	9	Sold $18,760 of accounts receivable to Center Bank. Center charges a 4% factoring fee.
	17	Received $4,065 cash from customers in payment on their accounts.
	27	Borrowed $10,720 cash from Center Bank, pledging $13,936 of accounts receivable as security for the loan.

  

Prepare journal entries to record the above selected July transactions. (The company uses the perpetual inventory system.)

 

Explanation:

July

9

Factoring Fee Expense = $18,760 × 0.04 = 750

  

July	27	Note to Financial Statements:
		Accounts receivable in the amount of $13,936 are pledged as security for a $10,720 note payable to Center Bank.