Question

Nash Corp. factors $365,000 of accounts receivable with Crane Finance Corporation on a without recourse basis on July 1, 2017. The receivables records are transferred to Crane Finance, which will receive the collections. Crane Finance assesses a finance charge of 1.50% of the amount of accounts receivable and retains an amount equal to 6% of accounts receivable to cover sales discounts, returns, and allowances. The transaction is to be recorded as a sale.

Prepare the journal entry on July 1, 2017, for Nash Corp. to record the sale of receivables without recourse. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Date
Account Titles and Explanation
Debit
Credit
July 1, 2017

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Prepare the journal entry on July 1, 2017, for Crane Finance Corporation to record the purchase of receivables without recourse. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Date
Account Titles and Explanation
Debit
Credit
July 1, 2017

Answer 1

1-Jul	Cash	337625
	Due from Factor	21900		=365000*6%
	Loss on Sale of Receivables	5475		=365000*1.5%
	Accounts Receivable		365000
1-Jul	Accounts Receivable	365000
	Due to Nash Corp.		21900
	Financing Revenue		5475
	Cash		337625