Answered: Prepare the journal entry to record the…

Business

Accounting

Prepare the journal entry to record the factoring.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: writes it off as a bad debt. On June 5, Park unexpectedly pays the amount previously written off.…

A: The allowance for doubtful accounts is created to record estimated bad debt expense for the period.…

Q: Johnson company's financial year ended on December 31, 2010. All the transactions related to the…

A: Date Particulars Debit ($) Credit ($) Jan 15 Allowance for uncollectible accounts…

Q: Aye Company factored P600,000 of its accounts receivable to Sweet Company on October 1. Control was…

A: Factoring fee = 600,000 x 3% = 18,000 Factor holdback = 600,000 x 5% = 30,000 Interest charges =…

Q: Assets 050 (1,050) 1,050 1,050 050 (1,050) e Choice Balance Sheet Stockholders' Equity NA =…

A: The account receivables is the current assets for the business. The allowance for doubtful accounts…

Q: Required information [The following information applies to the questions displayed below.] Tyrell…

A: The notes payable are issued for limited time period and can be categorized as current or…

Q: 9.Tito Company entered into an assignment arrangement with Easy Bank whereby the assignee would…

A: A "note payable" is an obligation that constitutes a formal written promise to return a certain sum…

Q: On November 30, accounts receivable in the amount of P900,000 were assigned to Turon Finance Co. by…

A: Accounts Receivable (AR) are the profits or revenues that a business expects to receive from…

Q: On January 1, 2022, Skysong, Inc. had Accounts Receivable of $52,500 and Allowance for Doubtful…

A: A Journal entry is a primary entry that records the financial transactions initially. The…

Q: On December 31, Year 1, the Loudoun Corporation estimated that 3% of its credit sales of $112,500…

A: Under allowance method, bad debt recovered will first reinstated that means accounts receivable…

Q: Evergreen Company sells lawn and garden products to wholesalers. The company's fiscal year-end is…

A: The effects of each transaction which is recorded on the income statement have an impact on the net…

Q: At the beginning of the year, Mitchum Enterprises allows for estimated uncollectible accounts of…

A: Receivables, loans, or other types of obligations that almost seldom, if ever, result in payment are…

Q: At year-end (December 31), Chan Company estimates its bad debts as 0.50% of its annual credit sales…

A: Bad debt expense is recorded by estimating the uncollectible accounts. Bad debt expense = Annual…

Q: Austin, Inc., began business on January 1. Several transactions for the year follow: May 2 Received…

A: It is the first step to record the financial transaction in the books of accounts that have two…

Q: CPA Co. factored accounts receivable of P2,500,000 with credit terms of 3/10, n/30 immediately after…

A: Cash is an asset which is used as consideration for exchange of goods and services. It is treated as…

Q: At the beginning of July, ABC assigned P2,000,000 out of its P10,000,000 outstanding accounts…

Q: At year-end (December 31), Chan Company estimates its bad debts as 0.80% of its annual credit sales…

A: Bad debts represent the portion of accounts receivable estimated to be unrecovered from the debtors.…

Q: On August 1, Handley Ltd. accepted a $25,200 note from Borges Ltd. in settlement of an account…

A: August 1: Accounts Receivable $25,200 To Notes Receivable $25,200 (Recording…

Q: Exon Company sold accounts receivable of $28,000 (with an allowance for doubtful accounts of $840)…

A: Introduction: Journals: Recording of a business transactions in a chronological order. First step in…

Q: Guasha Corp. factored P600,000 of accounts receivable to Stalactite Corp. on October 1, 2020.…

A: Accounts receivable is the balance of the amount due to the company for goods or services provided…

Q: Sandra Oh Company purchased $ 10,000 of products on credit from Academy Company, signing a 120 -…

A: Journal entry is the act of keeping records of transactions in an accounting journal. An accounting…

Q: Samberg Incorporated had the following transactions. a. October 1 - Sold $22,000 of merchandise on…

A: Introduction: A journal entry is a record of a commercial transaction in a company's accounting…

Q: On April 4, 2021, LASTNATOBEYBE, Inc. sold goods on account to a customer for P1,000,000, terms were…

A: Factoring means where the account receivables has been sold to outside agency against commission and…

Q: At year-end (December 31), Chan Company estimates its bad debts as 1% of its annual credit sales of…

A: Definition of Direct Write-off Method:The Direct Write-off method is a way of recording the loss…

Q: How much is Llido’s equity in the assigned accounts receivable as of December 31?

A: a Cash $723,000 Finance Charges ($900,000*3%) $27,000 To Notes Payable…

Q: 1. Oreo Company will receive and record cash of 3,700,685 2. Assuming all receivables are…

A: working notes: 1) fee =P5,000,000 *5%=P250000 hold back =P5,000,000 *20%=P1000000…

Q: Tyrell Company entered into the following transactions involving short-term liabilities. Year 1…

A: Interest is computed based on Principal amount, Rate of interest and period due.Interest accrual is…

Q: Prepare Tamarisk's journal entries for the initial transaction and the collection of $12,500 at…

A: Journal Entry in the books of Tamarisk Inc. Accounts title & Explanation Debit Credit…

Q: Samberg Incorporated had the following transactions. a. October 1 - Sold $20,000 of merchandise on…

A: A journal entry is a record of a commercial transaction in a company's accounting system. Journal…

Q: ompany obtains $37,600 in cash by signing a 7%, 6-month, $37,600 te payable to First Bank on July 1.…

A: Liabilities are what a company owes to outsiders, when the liability is not held for more than one…

Q: On May 16, 20X1, Safeway Company received a 90-day, 10 percent, $7,000 interest-bearing note from…

A: Bills Receivable:These are the note or a document that given by the debtor formally agree for the…

Q: What is the loss on factoring to be recorded by Rosewell Company? Prepare the journal entry to…

A: Factoring is the process of selling a company’s accounts receivables to a third party at a lower…

Q: On January 1, Amil Corp. lent $37,000 to Windsor Ltd., accepting Windsor's $49,247, three-year,…

A: Zero interest-bearing note refers to a note that does not pay interest like a normal note. The…

Q: Whispering Incorporated factored $126,900 of accounts receivable with Metlock Factors Inc. on a…

A: Finance Charge=Accounts receivable×2%=$126,900×2%=$2,538

Q: and charged a 10% commission on the gross amount of the receivables. All conditions for a sale have…

A: In the context of accounting, journal entries are systematic and chronological records of financial…

Q: Maribel Company had sales of $5,600,000 for the year. During the same year, their uncollectible…

A: The bad debts are the debtors which are unable to py off their debtors on the due time.

Q: borrowing. BB gave a 14% note for P450,000 representing 90% of the assigned accounts and received…

A: In our question, BB Corp. has borrowed the loan amount of P 500,000 from Finance Company. So in the…

Q: Ivanhoe Company had cash sales of $77,328 (including taxes) for the month of June. Sales are subject…

A: Sales tax is a consumption tax imposed by the government on the sale of goods and services. It is…

Q: The ledger of Teal Mountain Inc. at the end of the current year shows Accounts Receivable $74,000;…

A: Alternatively, 'Uncollectibles expense account' can be used in place of 'bad debts expense'.

Q: On May 25, Al Mathir Company made a credit sale of OMR 320,000 to Wasan Company and received a note…

A: Following are the journal entries:

Q: On February 1, 2004, Mickey Mouse Corporation factored receivables amounting to P500,000 to Minnie…

A: Allowance for uncollectible accounts = Total accounts receivables x 3% = P500,000 x 3% = P15,000

Q: Required information [The following information applies to the questions displayed below.] At…

A: Journal Entry :— It is an act of recording transactions in books of account when transaction…

Q: On December 31, Year 1, the Loudoun Corporation estimated that 3% of its credit sales of $112,500…

A: The account receivables is the current assets for the business. The allowance for doubtful accounts…

Q: On May 25, Al Mujaaz Company made a credit sale of OMR 220,000 to Al Zahir Company and received a…

A: Accounts Receivable refers to payment which company would receive from customers who had purchased…

Q: NNN Company factored P5,000,000 of accounts receivable to ABC Company on July 1, 2020. Control was…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want a…

Q: merchandise to

A: Given: Accounts receivable $109,000 doubtful accounts $10,000

Q: Prudential Company sold 30 air conditioning units, on January 15, 2020; sale price for each unit is…

A: Journal Entry: Journal entry is the act of keeping records of transactions in an accounting journal.…

Concept explainers

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.

Question

On December 1, Harrison Company sold without recourse $345,000 of its accounts receivable to Happy Finance Company for 85% of their value. A 10% commission on the gross value of the factored accounts was charged.

Required:

Prepare the journal entry to record the factoring.

Definition Definition Money that the business will be receiving from its clients who have utilized the credit provided to buy its goods and services. The credit period typically lasts for a short term, lasting from a few days, a few months, to a year.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Vision Importing Company engaged in the following transactions involving promissory notes: Jul 2 Sold engines to morgan company for $180,000 to exchange for a 90-day, 12 percent promissory note. July 15 Sold engines to level company for $96,000 in exchange for a 90-day, 14 percent note. July 30 sold engines to level company for $90,000 in exchange for a 90-day, 11 percent note. Required: For each of the notes, determine the (a) maturity date, (b) interest on the note, and (c) maturity value. (Round to the nearest cent.) Assume that the fiscal year for Vision Importing ends on August 31. How much interest income should be recorded on that date? (Round to the nearest cent.)
Blunt Company makes credit sales of $21,000 during the month of February 2019. During 2019, collections are received on February sales of $20,400, accounts represent-ing $600 of these sales are written off as uncollectible, and a $100 account previously written off is collected. Required: 1. Prepare the journal entries necessary to record the preceding information if (a) bad debts are estimated as 3% of credit sales at the time of sale and (b) the bad debts are recorded as they actually occur.
On December 1, Farley Corporation assigns $250,000 of its accounts receivable to Greenhouse Company for cash. Greenhouse charges a $1,500 service fee, advances 80% of Farley’s accounts receivable and charges a 7% interest rate on any outstanding loan balance. A. Prepare the journal entries to record the financing arrangement on Farley’s books. B. On December 31, Farley Received $40,000, on assigned accounts. Prepare the journal entries to record the cash collection on the receivable and the payment to Greenhouse. (Round your final number to the nearest dollar).
Geary Corporation had the following transactions: Apr. 15 - Issued a $6,000, 60-day, eight percent note payable in payment of an account with Marion Company. May 22 - Borrowed $50,000 from Sinclair Bank, signing a 60-day note at nine percent. June 14 - Paid Marion Company the principal and interest due on the April 15th note payable. July 13 - Purchased $15,000 of merchandise from Sharp Company; signed a 90-day note with eight percent interest. July 21 - Paid the May 22 note due to Sinclair Bank. Oct 02 - Borrowed $38,000 from Sinclair Bank, signing a 120-day note at twelve percent interest. Oct 11 - Paid the note payable and accrued interest to the Sharp Company (July 13). Record these transactions in general journal form. Record any adjusting entries for interest in general journal form. Geary Corporation has a December 31 year-end.
Alaska Company finances some of its current operations by factoring its accounts receivable to a finance company. On July 1, 2021, the company factored $2,000,000 of its accounts receivable to GMA Company. Purchase price was 85% of the receivables factored. GMA Company withheld 5% of the purchase price as protection against sales returns and allowances. Sales returns recorded by Alaska Company on the factored accounts receivable totaled P30,000; the balance of the factor's holdback was settled by the finance company on August 31, 2021. QUESTION:a.) What was the net cash received by Alaska Company from these factored accounts? b.) Give the entries in the books Alaska Company to record the foregoing in the months of July and August 2021.
Geary Corporation had the following transactions: · Apr. 15 - Received $6,000 from Marion Company and signed a 60-day, eight percent note payable. · May 22 - Borrowed $50,000 from Sinclair Bank, signing a 60-day note at nine percent. · June 14 - Paid Marion Company the principal and interest due on the April 15th note payable. July 13 - Purchased $15,000 of merchandise from Sharp Company; signed a 90-day note with eight percent interest. July 21 - Paid the May 22 note due to Sinclair Bank. · Oct 02 - Borowed $38,000 from Sinclair Bank, signing a 120-day note at twelve percent interest. · Oct 11 - Paid the note payable and accrued interest to the Sharp Company (July 13). Required: 1. Record these transactions in a general journal format. 2. Record any adjusting entries for interest in a general journal format. Geary Corporation has a December 31 year-end.
On December 31, Year 1, the Loudoun Corporation estimated that 3% of its credit sales of $112.500 would be uncollectible. Loudoun uses the allowance method. On February 15, Year 2, one of Loudoun's customers failed to pay his $1,050 account and the account was written off. On April 4, Year 2, this customer paid Loudoun the $1,050. Which of the following correctly states the effect of Loudoun's recording the restablishment of the receivable on April 4, Year 2? Cash 蛋蛋蛋白 NA a. b. NA C. NA d. NA Assets Multiple Choice + Net Realizable Value - 1,050 (1,050) (1,050) (1,050) 1,050 (1,050) Option A Option Balance Sheet Option C Liabilities + Accounts Payable + NA + NA (1,050) 1,050 + Stockholders' Equity Retained earnings NA (1,050) NA NA Common Stock NA NA NA (1,050) Revenue NA (1,050) NA NA Income Statement Expenses NA NA NA 1,050. = Net Income NA (1,050) NA (1,050) Statement of Cash Flows NA NA NA NA
1. Prepare general journal entries for the following transactions for the current year: April 25 Sold $3,500 of merchandise to Phillip Corporation receiving a 9%, 60-day, $3,500 note receivable (the merchandise cost $2,000) June 24 The note of Phillip Corporation was dishonored. Date Description Post Ref Debit Credit
VKS Corp. assigned P500,000 of accounts receivable to RK Finance Co. as security for a loan of P420,000. IntAcc1 charged a 2% commission on the amount of the loan; the interest rate on the note was 10%. During the first month, VKS collected P110,000 on assigned accounts after deducting P380 of discounts. VKS accepted returns worth P1,350 and wrote off assigned accounts totaling P3,700. The amount of cash VKS received from RK at the time of the transfer was ___________
State the accounting entries required if a business made sales on credit of $10,000, on which it must account for sales tax at the rate of 20%.
CPA Co. received from a customer a one-year, P1,000,000 note bearing annual interest of 10%. After holding the note for three months, the entity discounted the note at the bank at an effective interest rate of 12%. The customer paid the bank in full at maturity date. Compute the loss on note receivable discounting assuming the endorsement is without recourse.
On May 10, 20X1, Washington Company received a 90-day, 8 percent, $8,400 interest-bearing note from Whitehead Company in settlement of Whitehead's past-due account. On June 30, Washington discounted this note at City Bank and Trust. The bank charged a discount rate of 13 percent. On August 8, Washington received a notice that Whitehead had paid the note and the interest on the due date. Required: Prepare the entries in general journal form to record these transactions. Analyze: If the company prepared a balance sheet on July 31, 20X1, how should Notes Receivable-Discounted be presented on the statement?