On September 1, Global Company factored $1,000,000 of accounts receivable with Marks Financing on a without recourse basis. Under the arrangement, Marks Financing was to make the collections, handle the sales discounts, and absorb the credit losses. Marks Financing assessed a finance charge of 4% of the total accounts receivable factored and retained an amount equal to 2% of the total receivables to cover sales discounts Required: a Prepare the journal entry required on Marks Financing on September 1. b. Assume Global Company factors the $1,000,000 of accounts receivable with Marks Financing on a with recourse basis. Prepare the journal entry required on Global

On September 1, Global Company factored $1,000,000 of accounts receivable with Marks Financing on a without recourse basis. Under the arrangement, Marks Financing was to make the collections, handle the sales discounts, and absorb the credit losses. Marks Financing assessed a finance charge of 4% of the total accounts receivable factored and retained an amount equal to 2% of the total receivables to cover sales discounts Required: a Prepare the journal entry required on Marks Financing on September 1. b. Assume Global Company factors the $1,000,000 of accounts receivable with Marks Financing on a with recourse basis. Prepare the journal entry required on Global

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question 11 On September 1 , Global Company factored $ 800,000 of accounts receivable with Marks Financing on a without recourse basis . Under the arrangement , Marks Financing was to make the collections , handle the sales discounts , and absorb the credit losses . Marks Financing assessed a finance charge of 6 % of the total accounts receivable factored and retained an amount equal to 3 % of the total receivables to cover sales discounts . Required : a . Prepare the journal entry required on Marks Financing on September 1 . b . Assume Global Company factors the $ 800,000 of accounts receivable with Marks Financing on a with recourse basis . Prepare the journal entry required on Global company's book on September 1 .
PROBLEM 4 On May 1, Dexter, Inc. factored P1,200,000 of accounts receivable with Quick Finanm on a without recourse basis. Under the arrangement, Dexter was to handle disputes concening service, and Quick Finance was to make the collections, handle the sales discounts, and absorb the credit losses. Quick Finance assessed a finance charge of 6% of the total accounts receivable factored and retained an amount equal to 2% of the total receivables to cover sales discounts. Instructions (a) Prepare the journal entry required on Dexter's books on May 1. (b) Prepare the journal entry required on Quick Finance's books on May 1. (c) Assume Dexter factors the P1,200,000 of accounts receivable with Quick Finance on a with recourse basis instead. The recourse provision has a fair value of P21,000. Prepare the joumal entry required on Dexter's books on May 1.
Problem 4 MXC Company is a retailer. Its entered into a continuing agreement with SHN Financing Corporation to factor its accounts receivable to the latter. They agreed on the following:  Credit terms is 5/10, n/30  5% commission to SHN based on the gross amount of the accounts receivable  20% of the gross uncollected accounts receivable will be withheld by SHN  Returns by customers will be honored During April 2020, the following transactions took place relating to said agreement: April 14 MXC sold goods on account to NVG Company, P300,000 and accounts were immediately factored by SHN. April 16 MXC sold goods on account to MXG Company, P200,000 and accounts were immediately factored by SHN. April 18 NVG returned goods amounting to P20,000. April 20 NVG paid in full. April 25 MXC sold goods on account to AFN Company, P600,000 and accounts were immediately factored by SHN. April 26 AFN paid in full. Prepare the journal entries and compute the balance of the account Receivable from…
Problem 8-6 (ACP) Bleak Company provided the following information: Dec. 1 Assigned P1,500,000 of accounts receivable to a bank on a nonnotification basis in consideration for a loan. The bank advanced P1,300,000 less a service charge of P50,000. The entity signed a promissory note bearing interest of 1% per month on the unpaid loan balance. 31 Collected assigned accounts of P1,000,000 less sales discount of P30,000. 31 Remitted the collection to the bank in payment first for the interest and the balance to the principal. Required: a. Prepare journal entries to record the transactions. b. Indicate the classification and disclosure of the accounts related to the assignment on December 31.
Problem 2 On September 1, 2020, Rayhak Company assigned specific receivables totaling to P750,000 toPak Bank as a collateral on a P625,000, 12% loan. Pak Bank will collect the assigned accountsreceivable. The bank also assessed a 2% service charge on the total accounts receivableassigned. Collections of assigned accounts during September 2020 totaled P260,000 gross ofcash discounts amounting to P3,500. Prepare all the journal entries relating to the problem for themonth of September 2020. (Books of Rayhak)
Selected data for the Erdin Corporation for the year ended Decmeber 31, 20x5 is provided below: Credit sales Accounts receivable written off Recoveries of previously written of accounts receivable Allowance for doubtful accounts balance, January 1, 20x5 Accounts receivable, December 31, 20x5 Erdin estimates that 0.8% of sales will be uncollectible. Required - $4,500,000 36,500 1,800 33,000 cr. 625,000 Write the journal entries to record the accounts receivable written off, the recoveries and the bad debt expense. Calculate the ending balance in the allowance for doubtful account at December 31, 20x5. Note that the accounts receivable and recoveries have been accounted for in the ending Accounts Receivable balance.
VKS Co. assigned P 4,000,000 of accounts receivables as collateral for a P1,500,000 5% loan with a bank. The entity was also assessed by the bank a finance charge of 6% on the transaction and is paid up front. What amount should be recorded as a gain or loss on the transfer of accounts receivables?
Activity 2 Directions: Compute the uncollectible account expense using the percent of accounts receivable method. The following information needed in the computation of uncollectible accounts expense for March 2021 is available for Parkland Enterprises: Sales Cash Sales Accounts Receivable-ending 200,000.00 50,000.00 5,000.00 Assume that the company decided that five percent (5%) of accounts receivable are deemed uncollectible.
The following information is available for Market, Incorporated and Supply, Incorporated at December 31 Supply, Incorporated $ 75,400 2,256 867,100 Accounts Accounts receivable Allowance for doubtful accounts Sales revenue Required: a. What is the accounts receivable turnover for each of the companies? b. What is the average days to collect the receivables? c. Assuming both companies use the percent of receivables allowance method, what is the estimated percentage of uncollectible accounts for each company? Complete this question by entering your answers in the tabs below. Required A Required B Required C Assuming both companies use the percent of receivables allowance method, what is the estimated percentage of uncollectible accounts for each company? Note: Round your percentage answers to nearest whole number. Company Market, Incorporated $ 56,200 2,248 606,960 Market Supply Estimated Percentage of Uncollectible Accounts % %
Problem 3: Solid Company sold accounts receivable without recourse with amount ofP 3,000,000. The factor charged 5% commission on all accounts receivable factored and withheld 10% ofthe accounts factored as protection against customer returns and other adjustments. By year end, the entity had collected the factor's holdback there being no customer returns and other adjustments. REQUIRED: 1. Prepare journal entriesto record factoring and the subsequent collection ofthe factor's holdback if factoring işmade on a casual sale. 2. Prepare journal entriesto record factoring itismade as a regular means of financing.
Numbers 2-3 Janine Company factored P5,000,000 of accounts receivable. Control was surrendered by the entity. The finance company assessed a fee of 2% and retains a holdback equal to 10% of the accounts receivable. In addition, the finance company charged 12% interest computed on a weighted average time to maturity of the accounts receivable for 30 days? 2. What is the amount initially received from the factoring of accounts receivable? a. 4,250,000 b. 4,200,000 c. 4,700,685 d. 4,200,685 3. What total amount should be recognized as loss on factoring? a. 299,315 b. 799,315 C. 250,000 d. 0
1. On March 1, 20X1 ABC Co. assigned its P1,000,000 accounts receivable to B Bank in exchange for a 2-month 12% loan equal to 75% of the assigned receivables. ABC received the loan proceeds after a 2% deduction for service fee based on the assigned receivables.. During March, P500,000 were collected from the receivables. Sales returns amounted to P150,000. How much cash is received from the assignment transaction on March 1? 730,000 735,000 1,230,000 1,235,000