FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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
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Transcribed Image Text: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
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