Journal entries for Sold Merchandise Inventory on account.
1.(3/14/2009) Sold $700,000 Merchandise Inventory on account. All sales are recorded net of the 2% discount offered by the company. (Any discounts not eventually taken by the purchaser are recognized as interest income.) Shipping charges of $1, 020 were paid by the purchaser.
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2.(3/26/2009) Goochland factors $200,000 (gross sales value, as the discount period has expired) of its Accounts Receivable from the sale in Transaction 2 on a lessout recourse basis. The factor, Fairmont Factoring, assesses a finance charge of 4 percent of the gross accounts receivable factored, and retains 5 percent of the receivables for probable adjustments.
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