Answered

Westonci.ca is the premier destination for reliable answers to your questions, brought to you by a community of experts. Discover in-depth answers to your questions from a wide network of professionals on our user-friendly Q&A platform. Get quick and reliable solutions to your questions from a community of experienced experts on our platform.

Splish Corporation factors $268,100 of accounts receivable with Kathleen Battle Financing, Inc. on a with recourse basis. Kathleen Battle Financing will collect the receivables. The receivables records are transferred to Kathleen Battle Financing on August 15, 2020. Kathleen Battle Financing assesses a finance charge of 2% of the amount of accounts receivable and also reserves an amount equal to 4% of accounts receivable to cover probable adjustments. (b) Assume that the conditions are met for a transfer of receivables with recourse to be accounted for as a sale. Prepare the journal entry on August 15, 2020, for Splish to record the sale of receivables, assuming the recourse obligation has a fair value of $4,380.

Sagot :

Tundexi

Answer:

Finance Charge = Rate*Accounts Receivables = 0.02*268,800 = $5,376

Retention Amount = Rate*Accounts Receivables = 0.04*268,800 = $10,752

Cash Received = Accounts Receivables - Finance Charge - Retention Amount  = 268,800−5,376−10,752 = $252,672

Date     Account Titles & Explanation           Debit           Credit

15 Aug  Cash                                                 $252,672

             Retention amount                           $10,752

             Loss on sales of receivables          $10,026

                   Recourse liability                                             $4,650

                   Accounts receivables                                     $268,800

              (To record the sale of receivables)

We hope this was helpful. Please come back whenever you need more information or answers to your queries. We hope our answers were useful. Return anytime for more information and answers to any other questions you have. Keep exploring Westonci.ca for more insightful answers to your questions. We're here to help.