Question - Salen Company finances some of its current operations by assigning accounts receivable to a finance company. On July 1, 2010, it assigned, under guarantee, specific accounts amounting to $150,000. the finance company advanced 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 1/2% 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 1/2% of the total accounts outstanding as of July 31. This charge is to be deducted at the time of the first remittance due Salen Company from the finance company. (Hint: make entries at this time.) On August 31, 2010, Salen Company received a second statement from the finance company, together with a check for the amount due. The statement indicated that the finance company had collected an additional $50,000 and had made a further charge of 1/2% of the balance outstanding as of August 31.
Make all the journal entries on the books of Salen Company that are involved in the transactions above.