Problem 3: Solid Company sold accounts receivable without recourse with amount ofP 3,000,000. The factor charged 5% commission on all accounts receivable factored and withheld 10% ofthe accounts factored as protection against customer returns and other adjustments. By year end, the entity had collected the factor's holdback there being no customer returns and other adjustments. REQUIRED: 1. Prepare journal entriesto record factoring and the subsequent collection ofthe factor's holdback if factoring işmade on a casual sale 2. Prepare journal entriesto record factoring it ismade as a regular means of financing.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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