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Problem 8-3

The document provides journal entries for Elegant Company for May, June, and July. In May, the company assigned $800,000 of accounts receivable to the bank in exchange for a $640,000 loan. In June, the company paid $490,000 towards the loan and recorded interest expense. In July, the company paid the remaining $150,000 loan balance and recorded additional interest expense.

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Gilbert Morales
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157 views1 page

Problem 8-3

The document provides journal entries for Elegant Company for May, June, and July. In May, the company assigned $800,000 of accounts receivable to the bank in exchange for a $640,000 loan. In June, the company paid $490,000 towards the loan and recorded interest expense. In July, the company paid the remaining $150,000 loan balance and recorded additional interest expense.

Uploaded by

Gilbert Morales
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd

Problem 8-3

Elegant Company

Prepare journal entries to record the transactions.


May-01 Accounts receivable-Assigned 800,000.00
Accounts receivable 800,000.00

1 Cash (640,000-20,000) 620,000.00


Service charge 20,000.00
Notes Payable-Bank 640,000.00

5 Sales return 30,000.00


Accounts receivable-assigned 30,000.00

10 Cash 490,000.00
Sales discount(2%*500,000) 10,000.00
Accounts receivable-assigned 500,000.00

Jun-01 Notes payable-bank 490,000.00


Interest expense (2%*640,000) 12,800.00
Cash 502,800.00

7 Allowance for doubtful accounts 10,000.00


Accounts receivable-assigned 10,000.00

20 Cash 200,000.00
Accounts receivable-assigned 200,000.00

Jul-01 Notes payable-bank (640,000-490,000) 150,000.00


Interest expense (2%*150,000) 3,000.00
Cash 153,000.00
1 Accounts receivable 60,000.00
Accounts receivable-assigned 60,000.00

Accounts receivable-assigned 800,000.00


Less: Collections 690,000.00
Sales discount 10,000.00
Sales return 30,000.00
Worthless accounts 10,000.00 740,000.00
60,000.00

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