RECEIVABLE FINANCING

Journal Entries

March 1 Cash 2,000,000

Note Payable - bank

April 1 Cash 980,000

Sales Discount 20,000
Accounts Receivable

June 1 Cash 2,000,000

Accounts Receivable

Sept 1Note Payable - bank 2,000,000

Interest Expense (12% x 2,000,000 x 6/12) 120,000
Cash

Requirement 1
2020
Oct 1 Cash 3,600,000
Discount on Note Payable - bank (10% x 4,000,000) 400,000
Note Payable - bank

Oct 1 Interest Expense (400,000 x 3/12) 100,000

Discount on Note Payable
2021
Oct 1 Note Payable -bank 4,000,000
Cash

Dec 31 Interest Expense 300,000

Discount on Note Payable

Journal Entries
 July 1 Accounts Receivable - assigned 500,000
Accounts Receivable

July 1 Cash (400,000 - 10,000) 390,000

Service Charge (2% x 500,000) 10,000
Note Payable - bank

Aug 1 Cash 330,000

Accounts Receivable - assigned

Aug 1 Interest Expense (1% x 400,000) 4,000

Note Payable - bank 326,000
Cash

Sept 1Cash 170,000

Accounts Receivable - assigned

Sept 1Interest Expense (1% x 74,000) 740

Note Payable - bank 74,000
Cash

Journal Entries

July 1 Cash 680,000

Service Charge (5% x 800,000) 40,000
Receivable from factor (10% x 800,000) 80,000
Accounts Receivable

July 15 Sales Return and Allowances 20,000

Receivable from factor

July 31 Cash (80,000 - 20,000) 60,000

Receivable from factor
2,000,000

1,000,000

2,000,000

2,120,000

4,000,000

100,000

4,000,000

300,000
500,000

400,000

330,000

330,000

170,000

74,740

800,000

20,000

60,000