Sale of Receivables Hunt Incorporated sold $300,000 of accounts receivable to Gannon Factors Inc. on a with recourse basis. Gannon assesses a 2% finance charge of the amount of accounts receivable and retains an amount equal to 6% of accounts receivable for possible adjustments. Hunt estimates a recourse liability to cover bad debts of $15,000. Subsequently, the factor collected $283,000 in cash from the accounts receivable Part B: Prepare the journal entry FOR HUNT to settle the transaction after the collection of the receivables. (hint: you may or may not need all the debits and credits) Chart of Accounts Cash Due from Factor Loss on Sale Gain on Sale Accounts receivable Allowance for bad debts Recourse liability Interest revenue

Sale of Receivables Hunt Incorporated sold $300,000 of accounts receivable to Gannon Factors Inc. on a with recourse basis. Gannon assesses a 2% finance charge of the amount of accounts receivable and retains an amount equal to 6% of accounts receivable for possible adjustments. Hunt estimates a recourse liability to cover bad debts of $15,000. Subsequently, the factor collected $283,000 in cash from the accounts receivable Part B: Prepare the journal entry FOR HUNT to settle the transaction after the collection of the receivables. (hint: you may or may not need all the debits and credits) Chart of Accounts Cash Due from Factor Loss on Sale Gain on Sale Accounts receivable Allowance for bad debts Recourse liability Interest revenue

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Mountain High Ice Cream Company transferred $64.000 of accounts receivable to the Prudential Bank. The transfer was made with recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10% to cover sales returns and allowances. When the bank collects the receivables, it will remit to Mountain High the retained amount (which Mountain estimates has a fair value of $5.400). Mountain High anticipates a $3.400 recourse obligation. The bank charges a 2% fee (2% of $64.000), and requires that amount to be paid at the start of the factoring arrangement. Required: Prepare the journal entry to record the transfer on the books of Mountain High assuming that the sale criteria are met. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Assume that on January 1 of the current year, with the netrealizable value of accounts receivable equal to 470,000, thecompany decided to factor 400,000 of accounts receivable toGustav Factors, Ltd. Gustav retains 6% of the amount factored as a reserve or hold back. Gustav Factors also charged Council a 4%financing fee (4% of the total factored amount). As a result, only90% of the proceeds are remitted.Instruction: Prepare the journal entry to record the factoring of400,000 of account receivable assuming that Council sold thereceivable with recourse.
22. On July 1, Year 10, Cabaret Corporation factored P80,000 of its accounts receivable without recourse to Playtime Company. Playtime retains 10% of the accounts receivables as an allowance for sales returns and charges a 5% commission on the gross amount of factored receivables. How much cash did Cabaret receive from factoring its receivables? a. 80,000 b. 72,000 c. 68,000 d. 76,000
Factors, Inc. remits 90% of the amount factored to Alby and keeps 10% to cover sales returns When Factors, Inc. collects the receivables, it will remit the retained amount less a fee. Accounts receivables factored 30,000 Fair value of amount retained 2, 500 Fee on total factored amount 2% Prepare Alby Corp's journal entry to record the transfer assuming that the sale criteria are met.
Sale of Receivables Hunt Incorporated sold $300,000 of accounts receivable to Gannon Factors Inc. on a with recourse basis. Gannon assesses a 2% finance charge of the amount of accounts receivable and retains an amount equal to 6% of accounts receivable for possible adjustments. Hunt estimates a recourse liability to cover bad debts of $15,000. Subsequently, the factor collected $283,000 in cash from the accounts receivable Required: Part A: Prepare the journal entry for Hunt to record the sale of the receivables to Gannon. (hint: you may or may not need all the debits and credits) 1 2 3 41 A LO 5 6 7 8 9 Ref Account Titles Adjusting Entries Debit Credit 1 2 13 4 +56 ∞ O 17 18 19
JKL Company factored P6,000,000 of accounts receivable to a finance entity at the beginning of current year. Control was surrendered by DEF Company. The factor accepted the accounts receivable subject to recourse for nonpayment. The fair value of the recourse obligation is P100,000. The factor assessed a fee of 3% and retained a holdback equal to 5% of the accounts receivable. In addition, the factor charged 15% interest computed on a weighted average time to maturity of the accounts receivable of 54 days. Assuming that all accounts are collected, what is the gain or (loss) on factoring the accounts receivable? *
6. Celeste Company provided the following transactions, among others, for the current year. 1 Sold merchandise to XYZ Company for P500,000, terms 2/10, n/30. 2 the above account to Solid Finance under the following agreement June 1 Commission based on gross amount 5%. Hold back based on gross amount 25%. 9 Granted XYZ Company a credit allowance of P50,000 for damage in the shipment. 11 XYZ Company paid in full its account to Solid Finance. 15. Final settlement was made with Solid Finance. How much was the total amount received from the factoring? а. 500,000 b. 350,000 c. 416,000 d. 375,000
Ebasan Company factored P5,000,000 of accounts receivable. Control was surrendered by the entity. The transaction met the criteria to be accounted for as sale but subject to recourse for nonpayment. The fair value of the recourse obligation is P250,000. The finance company assessed a fee of 6% and retained a holdback equal to 10% of the accounts receivable. In addition, the firance company charged 12% Interest computed on a welghted average time to maturity af the accounts receivable for 60 days. What total amount should be recognized initially as loss on factoring?
Receivables
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J Hotheads Unlimited sold $440,000 of accounts receivable to Frozen Factors Inc. on a with recourse basis. Frozen assesses an 11% finance charge of the amount of accounts receivable and retains an amount equal to 8% of accounts receivable to cover probable adjustments. Prepare the journal entry for Hotheads to record the sale of the accounts receivable to Frozen assuming that the recourse liability has a fair value of $26,000
Show solutions Hope World Company factored Php600,000 of accounts receivable to Hangsang Company on July 1, 2021. Control was surrendered by Hope World. Hangsang accepted the receivables subject to recourse for nonpayment. Hagsang assessed a fee of 2% and retains a holdback equal to 5% of the accounts receivable. the fair value of the recourse obligation is Php12,000. 17. Hope World will receive and record cash of a.Php546,000 b. Php558,000 c. Php570,000 d. Php576,000 What amount of loss on factoring should Hope World company recognize? a. None b. 12,000 c. 24,000 d. 42,000