Question

# On June 30, 2021, Fixtures was considering alternatives to bolster ots cash position. A) Option One...

On June 30, 2021, Fixtures was considering alternatives to bolster ots cash position.

A) Option One called for transferring \$470,000 in accounts receivable to Tree Finance Company without recourse for 4% fee. Option Two calls for Fixtures to transfer the \$470,000 in receivables to Tree Finance with recourse. Tree Finance charges a 3% fee for receivables factored with recourse.

B) Option Two meets the conditions to be considered a sale, but Fixtures estimates a \$3,700 recourse liability. Under either option, Tree Finance will immediately remit 90% of the factored receivables to Fixtures and retain 10%. When Tree Finance collects the remaining receivable, it remita the amount, less the fee, to Fixtures. Fixtures estimates that the fair value of the final 10% of the receivable is \$28,500 (ignore the factoring fee)

REQUIRED
1. Prepare any necssary journal entery or entries if receivable are factored under Option One
2. Prepare any necssary journal entery or entries if receivable are factored under Option Two

#### Homework Answers

Answer #1
 particular debit credit cash (90%*\$470,000 ) \$423,000 loss on sale of receivable (balancing figure) \$37,300 receivable from factor \$28,500 - (4% x 470,000) (\$28,500 - 18,800) \$9,700 account receivable \$470,000

Explantion account receivable:

423,000 +9,700 - 470,000

=37,300

 particular debit credit cash (90%*\$470,000 ) \$423,000 loss on sale of receivable (balancing figure) \$32,600 receivable from factor \$28,500 - (3% x 470,000) (\$28,500 - 14,100) \$14,400 account receivable \$470,000

Explantion account receivable:

423,000 +14,400 - 470,000

=32,600

Any doubt comment below i will explain or resolve until you got....
PLEASE.....UPVOTE....ITS REALLY HELPS ME....THANK YOU....SOOO MUCH....

Know the answer?
Your Answer:

#### Post as a guest

Your Name:

What's your source?

#### Earn Coins

Coins can be redeemed for fabulous gifts.

##### Not the answer you're looking for?
Ask your own homework help question
ADVERTISEMENT
##### Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

ADVERTISEMENT