FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:Waterway Corporation factors $260,800 of accounts receivable with Kathleen Battle Financing, Inc. on a with recourse
basis. Kathleen Battle Financing will collect the receivables. The receivables records are transferred to Kathleen Battle
Financing on August 15, 2025. Kathleen Battle Financing assesses a finance charge of 2% of the amount of accounts
receivable and also reserves an amount equal to 4% of accounts receivable to cover probable adjustments.
(b) Assume that the conditions are met for a transfer of receivables with recourse to be accounted for as a sale. Prepare
the journal entry on August 15, 2025, for Waterway to record the sale of receivables, assuming the recourse obligation
has a fair value of $5,000. (If no entry is required, select "No Entry" for the account titles and enter O for
the amounts. Credit account titles are automatically indented when the amount is entered. Do not
indent manually. List all debit entries before credit entries.)
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