Assigned Accounts Receivable -Journal Entries
Salen Company finances some its current operations by assigning accounts receivable to a finance company. On July 1,2017, it assigned, under guarantee, specific accounts amounting to $150,000. The finance company advance to Salen 80% of the accounts assigned (20% of the total to be withheld until the finance company has made its full recovery), less a finance charge of ½% of the total accounts assigned.
On July 31, Salen Company received a statement that the finance company had collected $80,000 of these accounts and had made an additional charge of ½% of the total accounts of outstanding as of July 31. This charge has to be deducted at the time of the first remittance due to Salen Company from the finance company. (HINT: Make entries at this time.) On August 31,2017, Salen Company received a second statement from the finance of the company, together with a check for the amount of due. The statement indicated that the finance company had collected an additional $50,000 and had a further charge of ½% of the balance outstanding as of August 31.
Instructions: Make all entries on the books of Salen Company that are involve in the transactions above.