Question

Question 80.5/1 View Policies Show Attempt History Current Attempt in Progress Shamrock Corp. factors $370,000 of accounts receivable with Bridgeport Finance Corporation on a without recourse basis on July 1, 2020. The receivables records are transferred to Bridgeport Finance, which will receive the collections. Bridgeport Finance assesses a finance charge of 1.70% 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. (a) Correct answer iconYour answer is correct. Prepare the journal entry on July 1, 2020, for Shamrock 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, 2020 Cash 341,510 Loss on Sale of Receivables 6,290 Due from Factor 22,200 Accounts Receivable 370,000 eTextbook and Media List of Accounts Attempts: 2 of 3 used (b) Prepare the journal entry on July 1, 2020, for Bridgeport 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, 2020

Answer 1

	Journal entry to record in Shammock books for factoring accounts receivable to Bridgeport Finance Corporation
Dr	Cash	341510
Dr	Finance charges paid	6290
Dr	Loss on Factoring of receivables	22200
Cr	Accounts Receivable
	Journal entry to record receivables in Bridgeport Finance Corporation books of accounts
Dr	Accounts receivable	370000
Cr	Factoring finance Charges received		6290
Cr	Retainer fee to account for sales returns, discounts & allowances	22200
Cr	Accounts Receivable		341510