Question

Information on Bramble Corp., which reports under ASPE, follows:

July 1		Bramble Corp. sold to Cullumber Company merchandise having a sales price of $8,800, terms 3/10, n/60. Bramble records its sales and receivables net.
3		Cullumber Company returned defective merchandise having a sales price of $700.
5		Accounts receivable of $18,300 (gross) are factored with Ayayai Corp. without recourse at a financing charge of 8%. Cash is received for the proceeds and collections are handled by the finance company. (These accounts were subject to a 3% discount and were all past the discount period.)
9		Specific accounts receivable of $14,200 (gross) 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. Bramble will continue to make the collections. All the accounts receivable pledged are past the discount period and were originally subject to a 3% discount.
		December 29 Cullumber Company notifies Bramble that it is bankrupt and will be able to pay only 14% 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.) a) Prepare all necessary journal entries on Bramble Corp.’s books. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)

Answer 1

Date	Account Description	Debit	Credit
1-Jul	Accounts Receivable	8,536.00
	Discount Expenses	264.00
	Sales		8,800.00
	(Being Sales Recorded)
3-Jul	Sales Return	700.00
	Accounts Receivable		679.00
	Discount Expenses		21.00
	(Being Goods returned)
5-Jul	Cash	16,836.00
	Loss on Sale of Receivables	1,464.00
	Accounts Receivable		18,300.00
	Discounts Forfeited		180.00
9-Jul	Accounts Receivable	426.00
	Discounts Forfeited		426.00
9-Jul	Cash	9,243.00
	Interest Expesnes	1,457.00
	Note Payable		10,700.00
29-Dec	Accounts Receivable	243.00
	Discounts Forfeited		243.00
29-Dec	Allowance for Doubtful Debts	7,290.00
	Accounts Receivable		7,290.00

Please note that entries passed in 5th July and 9th July - It has been assumed that the forfeiture of discount entry not passed. So I have passed the entry.

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