Problem 8-1

1-Mar Cash 2,000,000.00

Notes Payable 2,000,000.00

There is no transfer of ownership over the P3M receivables.

Disclosure only.

1-Apr Cash 980,000.00

Sales Discount 20,000.00
Accounts Receivable 1,000,000.00

1-Jun Cash 2,000,000.00

Accounts Receivable 2,000,000.00

1-Sep Notes Payable 2,000,000.00

Interest Expense 120,000.00
Cash 2,120,000.00
Problem 8-3. Assignment Nonnotification
1-May AR - Assigned 800,000.00
Accounts Receivable 800,000.00
To reclassify your receivables.

Cash 620,000.00
Service Charge 20,000.00
Notes Payable 640,000.00

5-May Sales Returns and allowances 30,000.00

AR - Assigned 30,000.00

10-May Cash 490,000.00

Sales Discount 10,000.00
AR - Assigned 500,000.00

1-Jun Notes Payable 490,000.00

Interest Expense 12,800.00
Cash 502,800.00

7-Jun Allowance for Doubtful Accoun 10,000.00

AR- Assigned 10,000.00

20-Jun Cash 200,000.00

AR- Assigned 200,000.00

1-Jul Notes Payable 150,000.00

Interest Expense 3,000.00
Cash 153,000.00

Accounts Receivable 60,000.00

AR - Assigned 60,000.00
AR-Assigned 800,000.00
Notes Payable 640,000.00
Equity AR-Assigned 160,000.00
Problem 8-4 Assignment - Notification Basis
1-Jul AR- Assigned 1,500,000.00
Accounts Receivable 1,500,000.00

AR-Assigned 1,500,000.00
75% loan 1,125,000.00
Service charge 4% of AR assigned (60,000.00)
Proceeds from assignment 1,065,000.00

Cash 1,065,000.00
Service Charge 60,000.00
Notes Payable 1,125,000.00

1-Aug Notes Payable 800,000.00

AR-Assigned 800,000.00

Interest expense 22,500.00

Cash in Bank 22,500.00
1-Sep Notes Payable 325,000.00
Interest Expense 6,500.00
Cash 168,500.00
AR-Assgined 500,000.00

Accounts Receivable 200,000.00

AR-Assgined 200,000.00
Problem 8-8 Factoring - without recourse

AR factored 6,000,000.00
Commission - 15% (900,000.00)
Receivable from factor 10% (600,000.00)
ADA (200,000.00)
4,300,000.00

Cash 4,300,000.00
Commission expense 900,000.00
Receivable from factor 600,000.00
Allowance for Doubtful Accounts 200,000.00
Accounts Receivable 6,000,000.00

Cash 600,000.00
Receivable from factor 600,000.00
Problem 8-9
1-Jul Cash 680,000.00
Factoring fee 40,000.00
Receivable from Factor 80,000.00
Accounts Receivable 800,000.00

15-Jul Sales returns and allowanc 20,000.00

Receivable from Factor 20,000.00

31-Jul Cash 60,000.00

Receivable from Factor 60,000.00
Problem 8-12
30-Jun Cash 150,000.00
Factoring fee 10,000.00
Receivable from factor 40,000.00
Accounts Receivable 200,000.00

31-Dec AR- Assigned 300,000.00

AR - Unassigned 300,000.00

Cash 225,000.00
Service charge 15,000.00
Notes Payable 240,000.00

Accounts Receivable - Unassigned 1,000,000.00

Accounts Receivable - Assigned 300,000.00
Total outstanding AR 1,300,000.00
ADA 5% 65,000.00
Per book 30,000.00
DAE 35,000.00

Doubtful Accounts Expense 35,000.00

Allowance for Doubtful Accounts 35,000.00