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Fundamental Accounting Principles

Instructions Using Microsoft Excel
Prepare the journal entries on December 31, 2002, May 11, 2003, and June 12, 2003.

E1-5 Presented below are two independent situations.

(a) On March 3, Lisa Ceja Appliances sells $700,000 of its receivables to Horatio
Factors Inc. Horatio Factors assesses a finance charge of 3% of the amount of receivables
sold. Prepare the entry on Lisa Ceja Appliances' books to record the sale of the receivables.

(b) On May 10, Worthy Company sold merchandise for $4,000 and accepted the customer's
Firstar Bank MasterCard. At the end of the day, the Firstar Bank MasterCard receipts
were deposited in the company's bank account. Firstar Bank charges a 4% service charge
for credit card sales. Prepare the entry on Worthy Company's books to record the sale of merchandise.

Solution Preview

Hi there,
<br>Here are your journal entries:
<br>a) Sale of receivables
<br>DR: Cash 700,000
<br>CR: Accounts receivables 700,000
<br>DR: Finance charge ...

Solution Summary

This question involves the fundamentals of accounting