Information on Monty Corp., which reports under ASPE, follows: July 1 Dec. 29 3 5 9 Monty Corp. sold to Sandhill Ltd. merchandise having a sales price of $9,200, terms 2/10, n/60. Ignore cost of goods sold entry. Sandhill returned defective merchandise having a sales price of $900. The merchandise was not saleable and was scrapped. Accounts receivable of $20,200 are factored with Pronghorn Corp. without recourse at a financing charge of 8%. Cash Is received for the proceeds and collections are handled by the finance company. Specific accounts receivable of $15,700 are pledged to Landon Credit Corp. as security for a loan of $10,700 at a finance charge of 3% of the loan amount plus 8% Interest on the outstanding balance. Monty will continue to make the collections. All the accounts receivable pledged are past the discount period and were originally subject to a 2% discount. Sandhill notifies Monty that It Is bankrupt and will be able to pay only 10% of its account. Prepare the entry to write off the uncollectible balance using the allowance method. (a) Prepare all necessary journal entries on Monty's books. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem. List all debit entries before credit entries.) Date 7/1 7/3 Account Titles and Explanation Accounts Receivable Sales Revenue Sales Returns and Allowances Accounts Receivable 7/5 ✓ Cash Finance Expense Accounts Receivable 7/9 Cash 12/29 Interest Expense Allowance for Doubtful Accounts Accounts Receivable Debit 9200 900 19560 1640 10700 920 Credit 9200 900 21200 920
Information on Monty Corp., which reports under ASPE, follows: July 1 Dec. 29 3 5 9 Monty Corp. sold to Sandhill Ltd. merchandise having a sales price of $9,200, terms 2/10, n/60. Ignore cost of goods sold entry. Sandhill returned defective merchandise having a sales price of $900. The merchandise was not saleable and was scrapped. Accounts receivable of $20,200 are factored with Pronghorn Corp. without recourse at a financing charge of 8%. Cash Is received for the proceeds and collections are handled by the finance company. Specific accounts receivable of $15,700 are pledged to Landon Credit Corp. as security for a loan of $10,700 at a finance charge of 3% of the loan amount plus 8% Interest on the outstanding balance. Monty will continue to make the collections. All the accounts receivable pledged are past the discount period and were originally subject to a 2% discount. Sandhill notifies Monty that It Is bankrupt and will be able to pay only 10% of its account. Prepare the entry to write off the uncollectible balance using the allowance method. (a) Prepare all necessary journal entries on Monty's books. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem. List all debit entries before credit entries.) Date 7/1 7/3 Account Titles and Explanation Accounts Receivable Sales Revenue Sales Returns and Allowances Accounts Receivable 7/5 ✓ Cash Finance Expense Accounts Receivable 7/9 Cash 12/29 Interest Expense Allowance for Doubtful Accounts Accounts Receivable Debit 9200 900 19560 1640 10700 920 Credit 9200 900 21200 920
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Information on Monty Corp., which reports under ASPE, follows:
July 1
Dec. 29
3
5
9
Monty Corp. sold to Sandhill Ltd. merchandise having a sales price of $9,200, terms 2/10, n/60. Ignore cost of goods sold
entry.
Sandhill returned defective merchandise having a sales price of $900. The merchandise was not saleable and was
scrapped.
Accounts receivable of $20,200 are factored with Pronghorn Corp. without recourse at a financing charge of 8%. Cash
Is received for the proceeds and collections are handled by the finance company.
Specific accounts receivable of $15,700 are pledged to Landon Credit Corp. as security for a loan of $10,700 at a
finance charge of 3% of the loan amount plus 8% Interest on the outstanding balance. Monty will continue to make the
collections. All the accounts receivable pledged are past the discount period and were originally subject to a 2%
discount.
Sandhill notifies Monty that It Is bankrupt and will be able to pay only 10% of its account. Prepare the entry to write off
the uncollectible balance using the allowance method.
(a)
Prepare all necessary journal entries on Monty's books. (Credit account titles are automatically indented when the amount is entered. Do
not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record journal entries in the
order presented in the problem. List all debit entries before credit entries.)
Date
7/1
7/3
Account Titles and Explanation
Accounts Receivable
Sales Revenue
Sales Returns and Allowances
Accounts Receivable
7/5
✓
Cash
Finance Expense
Accounts Receivable
7/9
Cash
12/29
Interest Expense
Allowance for Doubtful Accounts
Accounts Receivable
Debit
9200
900
19560
1640
10700
920
Credit
9200
900
21200
920
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