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