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Presented below is information related to James Garfield Corp., which sells merchandise with terms 2/10, net 60. Garfield records its sales and receivables net.
|July 1||James Garfield Corp. sold to Warren Harding Co. merchandise having a sales price of $8,000.|
|5||Accounts receivable of$9,000 (gross) are factored with Andrew Jackson Credit Corp. without recourse at a financing charge of 9%. Cash is received for the proceeds; collections are handled by the finance company. (These accounts were all past the discount period.)|
|9||Specific accounts receivable of $9,000 (gross) are pledged to Alf Landon Credit Corp. as security for a loan of$6,000 at a finance charge of 6% of the amount of the loan. The finance company will make the collections. (All the accounts receivable are past the discount period.)|
|Dec. 29||Warren Harding Co. notifies Garfield that it is bankrupt and will pay only 10% 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.)|
Prepare all necessary entries in general journal form for Garfield Corp.
From the following list of activity bases for an automobile dealership, select the base that would be most appropriate for each of these costs: (1) preparation costs (cleaning, oil, and gasoline costs) for each car received, (2) salespersons’ commission of 5% of the sales price for each car sold, and (3) administrative costs for ordering cars.
e. Number of cars received
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