FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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The unadjusted
Debit Credit
Allowance for doubtful accounts $2,000
Sales revenue $5,800,000
Sales returns and allowances $34,000
On January 1, 2024, Rain sold $35,000 of its accounts receivable to Cloud Incorporated on a with recourse basis. Cloud assessed a 4% finance charge of the balance of accounts receivable and retained an amount equal to 5% of accounts receivable for possible adjustments.
Required
1. Prepare the fiscal 2023 year-end
2. Prepare the journal entries for Rain AND Cloud to record the sale of the accounts receivable to Cloud, assuming that the recourse liability had a fair value of $5,000. You must provide detailed calculations of amounts. Journal entry description is not required.
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