Pittance Company

Requirement: Prepare journal entries to record the transactions

Debit Credit

Mar-01 Cash 2,000,000

Note payable - Bank 2,000,000

Apr-01 Cash 980,000

Sales discount 20,000
Accounts receivable 1,000,000

Jun-01 Cash 2,000,000

Accounts receivable 2,000,000

Sep-01 Note payable - bank 2,000,000

Interest expense (2%*2m*6/12) 120,000
Cash 2,120,000
4
Idealist Company

Requirement1
Debit Credit
2020
Oct-01 Cash 3,600,000
Discount on note payable (10%*4,000,000) 400,000
Notes payable 4,000,000

1 Interest expense (400,000*3/12) 100,000

Discount on notes payable 100,000

2021
Oct-01 Notes payable - Bank 4,000,000
CaSH 4,000,000

Dec-31 Interest expense 300,000

Discount on notes payable 300,000
Requirement2

Current liabilities:
Note payable- bank (note3) 4,000,000
Discount on notes payable -300,000
Carrying amount 3,700,000

6pts
Note 3 - Note payable - bank
The accounts of P5,000,000 are pledged to secure the bank lo
pledged to secure the bank loan of 4,000,000
Service Company

Required: Prepare journal entries Debit Credit

May-01 Accounts receivable - assigned 800,000

Accounts receivable 800,000

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

Service charge 20,000
Notes payable - bank 640,000

5 Sales return 30,000

Accoutns receivable - assigned 30,000

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

Jun-01 Notes payable - bank 490,000

Interest expense (2%*640,000) 12,800
Cash 502,800

7 Allowance for doubtful accounts 10,000

Accounts receivable - assigned 10,000

20 Cash 200,000
Accounts receivable - assigned 200,000

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

Interest expense (2%*150,000) 3,000
Cash 153,000

1 Accounts receivable 60,000

Accounts receivable - assigned 60,000

Accounts receivable - assigned 800,000

Less: Collections 690,000
Sales discount 10,000
Sales return 30,000
Worthless accounts 10,000 740,000
60,000
9pts
Docile Company

Requirement: Prepare journal entries Debit Credit

Jul-01 Accounts receivable - assigned 1,500,000

Accounts receivable 1,500,000

1 Cash (1,125,000 - 60,000) 1,065,000

Service charge (4%*1.5m) 60,000
Notes payable - bank 1,125,000

Aug-01 Notes payable - bank 800,000

Accounts receivable - assigned 800,000
6pts
1 Interest expense (2%*1,125,000) 22,500
Cash 22,500

Sep-01 Cash 168,500

Interest expense 6,500
Notes payable - bank 325,000
Accounts receivable - assigned 500,000

Accounts receivable 200,000

Accounts receivable - assigned 200,000

Computation of cash on Sept1

Collection by bank 500,000

Less: Payment of loan (1,125,000-800k) 325,000
Excess collection 175,000
Less: Interest (2%*325,000) 6,500
Cash remittance from bank 168,500
Grateful Company

Requirement: Prepare journal entries Debit Credit

Jul-01 Accounts receivable - assigned 500,000

Accounts receivable 500,000

1 Cash (400,000-10,000) 390,000

Service charge (2%*500k) 10,000
Notes payable - bank 400,000

Aug-01 Cash 330,000

Accounts receivable - assigned 330,000

1 Interest expense (1%*400,000) 4,000

Notes payable - bank 326,000
Cash 330,000

Sep-01 Cash 170,000

Accounts receivable - assigned 170,000

Interest expense (1%*74,000) 740

Notes payable - bank 74,000
Cash 74,740
Bleak Company

Requirement a Debit Credit Requirement b

Dec-01 Accounts receivable - assigned 1,500,000 The Accounts receivable - assig

Accounts receivable 1,500,000 current asset and included in tr

Cash 1,250,000 The Notes payable - bank of 34

Service charge 50,000
Notes payable - bank 1,300,000 The company should disclose th

Cash 970,000 Accounts receivable - assigned

Sales discount 30,000 Notes payable - bank
Accounts receivable - assigned 1,000,000 Equity in signed accounts

Interest expense 13,000

Notes payable - bank 957,000
Cash 970,000
Requirement b

The Accounts receivable - assigned with a balance of 500,000 should be classified as

current asset and included in trade and other receivables

The Notes payable - bank of 343,000 should be classified and presented as current liablity

The company should disclose the equity in assigned account as follows:

Accounts receivable - assigned 500,000

Notes payable - bank -343,000
Equity in signed accounts 157,000
Vain Company

Requirement: Prepare journal entries on the books of assignor Debit Credit

Jul-01 Accounts receivable - assigned 800,000

Accounts receivable 800,000

1 Cash (640,000-24,000) 616,000

Service charge )3%*800,000) 24,000
Notes payable - bank 640,000

Aug-01 Interest expense (1%*640,000) 64,000

Notes payable - bank 413,600
Accounts receivable - assigned 420,000

Sep-01 Cash 91,336

Interest expense 2,264
Notes payable - bank 226,400
Accounts receivable - assigned 320,000

Accounts receivable 60,000

Accounts receivable - assigned 60,000

Bank loan 640,000

August 1 payment 413,600
Balance 226,400

Collection by bank 320,000

Less: Payment of loan 226,400
Intereset (1%*226,400) 2,264 228,664
Remittance from bank 91,336
5ptz
Dainty Company

Requirement: Prepare journal entries Debit Credit

1 Cash 4,500,000
Allowance for doubtful accounts 200,000
Receivable from factor 600,000
Loss on factoring 700,000
Accounts receivable 6,000,000

Accounts receivable factored 6,000,000

Factors holdback (10%*6,000,000) -600,000 2pts
Commission (15%*6,000,000) -900,000
Cash received 4,500,000

Accounts receivable 6,000,000

Commission -900,000
Net sales 5,100,000
Carrying amount of accounts receivable 5,800,000
Loss on factoring 700,000

2 Cash 600,000
Receivable from factor 600,000
Generous Company

Requirement: Prepare journal entries Debit Credit

Jul-01 Cash 680,000

Service charge (5%*800,000) 40,000
Receivable from factor (10%*800,000) 80,000
Accounts receivable 800,000

15 Sales return and allowances 20,000 3pts

Receivable from factor 20,000

Cash (80,000-20,000) 60,000

Receivable from factor 60,000
Commonplace Company

Requirement: Prepare journal entries Debit Credit

Jun-01 Accounts receivable 500,000

Sales 500,000

3 Cash 340,000
Sales discount (2%*500,000) 10,000
Commission (5%*500,000) 25,000
Receivable from factor (25%*500,000) 125,000
Accounts receivable 500,000

9 Sales return and allowances 50,000

Sales discount (2%*500,00) 1,000
Receivable from factor 49,000

11 No entry

15 Cash (125,000-49,000) 76,000

Receivable from factor 76,000
Epic Company

Requirement: Prepare journal entries Debit Credit

Jul-26 Cash 750,000

Commission (5%*1,000,000) 50,000
Receivable from factor (20%*1,000,000) 200,000
Accounts receivable 1,000,000
3pts
28 Sales return and allowances 50,000
Receivable from factor 50,000

Aug-31 Cash 150,000

Receivable from factor 150,000
Lucid Company

Requirements: Debit Credit

1 Cash 150,000
Service charge (5%*200,000) 10,000
Receivable from factor (20%*200,000) 40,000
Accounts receivable 200,000

2 Account receivable - assigned 300,000

Accounts receivable 300,000

Cash 225,000 12pts

Service charged (5%*300,000) 15,000
Notes payable - bank 240,000

3 Doubtful accounts 35,000

Allowance for doubtful accounts 35,000

Required allowance (5%*1,300,000) 65,000

Less Allowance - Jan1 30,000
Doubtful accounts 35,000

4 The NRV of the accounts receivable is included in trade and other receivables and presented as current assets

Accounts receivable - unassigned 1,000,000

Accounts receivable - assigned 300,000
Total 1,300,000
Less: Allowance for doubtful account 65,000
NRV 1,235,000
nted as current assets
Freeway Company

Requirement1: Books of Motorway Company Debit Credit

1 Cash 2,250,000
Receivable from factor 300,000
Allowance for doubtful accounts 100,000
Loss on factoring 350,000
Accounts receivable 3,000,000

Computation:

Gross amount 3,000,000

Holdback (10%*3,000,000) -300,000
Commission (15%*3,000,000) -450,000
Cash received 2,250,000

Sales price 2,550,000

Carrying amount of accounts receivable (3,000,000-100,000) 2,900,000
Loss on factoring 350,000

2 Cash 250,000
Receivable from factor 250,000

Computation:

Accounts receivable factored 3,000,000

Collection by factor 2,500,000
Balance - Dec 31 500,000

Receivable from factor per book 300,000

Required holdback (10%*500,000) 50,000
Remittance from factor 250,000
 Requirement2: Books of Freeway Company Debit Credit

1 Accounts receivable 3,000,000

Cash 2,250,000
Clients retainer 300,000
Commision income 450,000

2 Cash 2,500,000
Accounts receivable 2,500,000

3 Clients retainer 250,000

Cash 250,000

Doubtful accounts 20,000

Allowance for doubtful accounts (4%*500,000) 20,000
6pts