Question

1. Arness Woodcrafters sells $300,000 of receivables to Commercial Factors, Inc. on a with recourse basis....

1. Arness Woodcrafters sells $300,000 of receivables to Commercial Factors, Inc. on a with recourse basis. Commercial assesses a finance charge of 6% and retains an amount equal to 3% of accounts receivable. Arness estimates the fair value of the recourse obligation to be $8,000. Prepare the journal entry for (a) Arness and (b) Commercial Factors.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Arness:
Debit Credit
Cash 273000 =300000*(1-9%)
Due from Factor 9000 =300000*3%
Loss on Sale of Receivables 26000
      Accounts Receivable 300000
      Recourse Liability 8000
b
Commercial Factors:
Debit Credit
Accounts Receivable 300000
      Due to Arness (factor) 9000
      Interest Revenue 18000
      Cash 273000
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Arness Woodcrafters sells $300,000 of receivables to Commercial Factors, Inc. on a with recourse basis. Commercial...
Arness Woodcrafters sells $300,000 of receivables to Commercial Factors, Inc. on a with recourse basis. Commercial assesses a finance charge of 6% and retains an amount equal to 3% of accounts receivable. Arness estimated the fair value of the recourse obligation to be $8,000. Prepare the journal entry for (a) Arness and (b) Commercial Factors
Wildhorse Incorporated factored $123,000 of accounts receivable with Sheffield Factors Inc. on a without-recourse basis. Sheffield...
Wildhorse Incorporated factored $123,000 of accounts receivable with Sheffield Factors Inc. on a without-recourse basis. Sheffield assesses a 2% finance charge of the amount of accounts receivable and retains an amount equal to 6% of accounts receivable for possible adjustments. Prepare the journal entry for Wildhorse Incorporated and Sheffield Factors to record the factoring of the accounts receivable to Sheffield.
Martinez Corp. factors $705,000 of accounts receivable with Tamarisk, Inc., Inc. on a with recourse basis....
Martinez Corp. factors $705,000 of accounts receivable with Tamarisk, Inc., Inc. on a with recourse basis. Tamarisk, Inc. will collect the receivables. The receivable records are transferred to Tamarisk, Inc. on August 15, 2020. Tamarisk, Inc. assesses a finance charge of 2.0% of the amount of accounts receivable and also reserves an amount equal to 5.00% of accounts receivable to cover probable adjustments. Martinez prepares financial statements under ASPE. Assume the conditions for to be recorded as a sale are...
Sun Inc. factors $600,000 of its accounts receivables on a with recourse basis for a finance...
Sun Inc. factors $600,000 of its accounts receivables on a with recourse basis for a finance charge of 4%. The finance company retains an amount equal to 10% of the accounts receivable for possible adjustments. The estimated fair value of the recourse liability was $7,000. Which of the following is true? a. The loss on sale of receivable is $24,000 b. The loss on sale of receivable is $31,000 c. The loss on sale of receivable is $17,000 d. The...
1. Nash Inc. factors receivables with a carrying amount of $247,900 to Joffrey Company for $172,700...
1. Nash Inc. factors receivables with a carrying amount of $247,900 to Joffrey Company for $172,700 on a with recourse basis. The recourse provision has a fair value of $1,640. This transaction should be recorded as a sale. Prepare the appropriate journal entry to record this transaction on the books of Nash Inc. (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...
Sarasota Incorporated factored $167,400 of accounts receivable with Ivanhoe Factors Inc. on a without-recourse basis. Ivanhoe...
Sarasota Incorporated factored $167,400 of accounts receivable with Ivanhoe Factors Inc. on a without-recourse basis. Ivanhoe assesses a 2% finance charge of the amount of accounts receivable and retains an amount equal to 7% of accounts receivable for possible adjustments. Prepare the journal entry for Sarasota Incorporated and Ivanhoe Factors to record the factoring of the accounts receivable to Ivanhoe. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account...
Riverbed Incorporated factored $139,300 of accounts receivable with Marin Factors Inc. on a without-recourse basis. Marin...
Riverbed Incorporated factored $139,300 of accounts receivable with Marin Factors Inc. on a without-recourse basis. Marin assesses a 3% finance charge of the amount of accounts receivable and retains an amount equal to 5% of accounts receivable for possible adjustments. Prepare the journal entry for Riverbed Incorporated and Marin Factors to record the factoring of the accounts receivable to Marin. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account...
Urgent Bally Co. factors $3,000,000 of its accounts receivables without recourse for a finance charge of...
Urgent Bally Co. factors $3,000,000 of its accounts receivables without recourse for a finance charge of 4%. The finance company retains an amount equal to 8% of the accounts receivable for possible adjustments. Prepare the journal entry for Bally to record this transaction. Please use excel!!
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,...
E7.17B (LO 5)(Transfer of Receivables with Recourse) Leon Quartet Inc. factors receivables with a carrying amount...
E7.17B (LO 5)(Transfer of Receivables with Recourse) Leon Quartet Inc. factors receivables with a carrying amount of $220,000 to Joffrey Company for $170,000 on a with recourse basis. Instructions The recourse provision has a fair value of $1,000. This transaction should be recorded as a sale. a) Prepare the appropriate journal entry to record this transaction on the books of Leon Quartet Inc. b) Record the necessary journal entries, assuming that the sale was without recourse, i.e. the fair value...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT