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Accounting - Journal Entries

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.

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Solution Preview

Hi there,

Here are your entries:

(700,000 X 3% = 21,000 ; 700,000 - 21,000 = ...