Presented below is information related to Pronghorn Corp., which sells merchandise with terms 2/10, net 60. Pronghorn Corp. records its sales and receivables net.
July 1 Pronghorn Corp. sold to Warren Harding Co. merchandise having a sales price of $16,000.
5 Accounts receivable of $12,600 (gross) are factored with Andrew Jackson Credit Corp. without recourse at a financing charge of 8%. Cash is received for the proceeds; collections are handled by the
finance company. (These accounts were all past the discount period.)
9 Specific accounts receivable of $12,600 (gross) are pledged to Alf Landon Credit Corp. as security for a loan of $6,900 at a finance charge of 7% of the amount of the loan. The finance company will
make the collections. (All the accounts receivable are past the discount period.)
Dec. 29 Warren Harding Co. notifies Pronghorn that it is bankrupt and will pay only 10% of its account. Give the entry to write off the uncollectible balance using the allowance method. (Note: First record the
increase in the receivable on July 11 when the discount period passed.)
Prepare all necessary entries in general journal form for Pronghorn Corp. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are
automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)
7/5
Date
Account Titles and Explanation
(To record discount forfeited)
7/9
(To record notes payable)
Debit
Credit
