Question

Nash Corp. factors $365,000 of accounts receivable with Crane Finance Corporation on a without recourse basis...

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

Homework Answers

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
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