Journalizing Various Receivable Transactions: Sales, Returns,

E7-5 (Journalizing Various Receivable Transactions) Information on Janut Corp., which reports under ASPE, follows: July 1 - Janut Corp. sold to Harding Lid. merchandise having a sales price of $9,000, terms 2/10, n/60. Ignore cost of goods sold entry. July 3 - Harding Ltd. returned defective merchandise having a sales price of $700. The merchandise was not saleable and was scrapped. July 5 - Accounts receivable of $19,000 are factored with Jackson Credit Corp. without recourse at a financing charge of 9%. Cash is received for the proceeds and collections are handled by the finance company. July 9 - Specific accounts receivable of $15,000 are pledged to Landon Credit Corp. as security for a loan of $11,000 at a finance charge of 3% of the loan amount plus 9% interest on the outstanding balance. Janut will continue to make the collections. All the accounts receivable pledged are past the discount period and were originally subject to a 2% discount. Dec. 29 - Harding Ltd. notifies Janut that it is bankrupt and will be able to pay only 10% of its account. Give the entry to write off the uncollectible balance using the allowance method. Instructions: a. Prepare all necessary journal entries on Janut Corp.'s books. Debit Credit Accounts Receivable 1-Jul 9,000 Sales Revenue 9,000 Sales Returns & Allowances 700 3-Jul Accounts Receivable 700 Cash 17,290 5-Jul Loss on Sales of Receivable 1,710 Accounts Receivable 19,000 Cash 10,670 9-Jul Finance Charge 330 Notes Payable 11,000 Allowance for Doubtful Accounts 7,470 29-Dec Accounts Receivable 7,470