On October 30, 2018, Rashid Company Factored receivables with a carrying amount of $300000 to Mohammed...

On October 30, 2018, Rashid Company Factored receivables with a carrying amount of $300000 to Mohammed company. Mohammed company assesses a finance charge of 4% of the receivable and retains 6% of the receivables. Relative to this transaction you are to determine the amount of loss on the sale to be reported in the income statement of Rashid Company for February A. Assume that Rashid factors the receivable on a without recourse basis. The journal entry is B. Assume that Rashid factors the receivables on a with recourse basis. The recourse obligations have a fair value of 2500. The journal entry for Rashid

Expert Solution

Answer A Factoring without Recourse

Journal entry in the books of Rashid Company

Date	Account Title and Explanation	Debit	Credit
Oct 30 2018	Cash	$ 270,000
	Due from factor	$ 18,000
	Loss on sale of receivable	$ 12,000
	Account receivable		$ 300,000
	(Being account receivable sold)

Calculation of Cash received
Amount of Receivable sold		$ 300,000
Less:	Retained by factor @6%	$ 18,000
	Finance charges @4%	$ 12,000
	Cash received	$ 270,000

Answer B Factoring with Recourse

Journal entry in the books of Rashid Company

Date	Account Title and Explanation	Debit	Credit
Oct 30 2018	Cash	$ 270,000
	Due from factor	$ 18,000
	Loss on sale of receivable	$ 14,500
	Account receivable		$ 300,000
	Recourse Liability		$ 2,500
	(Being account receivable sold)

Loss on sale of receivable = $12000+$2500 =$14500

All the best

Hit thumbs up if satisfied

Have any query mention in comment section I ll reply

Thank you

ekkarill92 answered 1 month ago

Financing with receivables On May 1, 2018 Dewey, Inc. factored $1,425,000 of its receivables to Mullins...

Financing with receivables On May 1, 2018 Dewey, Inc. factored $1,425,000 of its receivables to Mullins Financing Corp. The receivables were factored without recourse. The transaction met US GAAP requirements to be accounted for as a sale. Mullins charged a factoring fee of 2.5% of the factored receivables and advanced 80% of the receivables amount to Dewey, withholding the rest to cover legitimate adjustments such as sales returns. Dewey’s controller expected that there would be approximately $150,000 in such adjustments....

Concord Inc. factors receivables with a carrying amount of $233,500 to Joffrey Company for $178,600 on...

Concord Inc. factors receivables with a carrying amount of $233,500 to Joffrey Company for $178,600 on a with recourse basis. The recourse provision has a fair value of $2,870. This transaction should be recorded as a sale. Prepare the appropriate journal entry to record this transaction on the books of Concord 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 is...

On 30 June 2018, an item of machinery had a carrying amount of $300,000 (current depreciation...

On 30 June 2018, an item of machinery had a carrying amount of $300,000 (current depreciation for the year has been provided). The machinery’s cost at acquisition was $500,000 at which time its estimated useful life was 10 years with no residual value. On 30 June 2018, the same item of machinery was assessed as having a recoverable amount of $240,000 with a remaining useful life of 6 years. On 30 June 2022, the machinery was assessed as having a...

30.) Determine the amount of the standard deduction allowed for 2018 in the following independent situations....

30.) Determine the amount of the standard deduction allowed for 2018 in the following independent situations. In each case, assume that the taxpayer is claimed as another persons dependent. a.) Curtis age 18 has income as follows:$700 interest from a certificate of deposit and $12,200 from repairing cars. b.) Mattie, age 18 has income as follows:$600 cash dividends from a stock investment and $4,700 from handling a paper route. c.) Jason age 16, has income as follows:$675 interest on a...

ABC Inc. Statement of Income For the period October 1, 2018 to September 30, 2019 Revenue &nb

ABC Inc. Statement of Income For the period October 1, 2018 to September 30, 2019 Revenue $15,800,000 Operating Expenses: Rent 1,350,000 Advertising expense 1,105,000 Bad Debts 179,000 Salaries and wages 3,800,000 Interest 3,150,000 Accounting and legal 195,000 Meals and entertainment 1,300,000 Amortization 750,000 Repairs and maintenance 500,000 Automotive 2,120,000 Net Income from Operations 1,351,000 Gain on disposal of asset 350,000 Net income before taxes 1,701,000 Income Taxes ...

ABC Company sold equipment on October 1, 2018, to XYZ Company for £1,000,000. It agrees to...

ABC Company sold equipment on October 1, 2018, to XYZ Company for £1,000,000. It agrees to repurchase this equipment in July 2019, for a price of £1,100,000. The proper accounting treatment for this transaction based on Select one: a. relevance b. going concern c. comparability d. substance over form

On October 1, Robertson Company sold inventory in the amount of $5,800 to Alberta, Inc. with...

On October 1, Robertson Company sold inventory in the amount of $5,800 to Alberta, Inc. with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Robertson uses a periodic inventory system. Alberta pays the invoice on October 8 and takes the appropriate discount. What journal entry will be recorded by Robertson on October 8? a. Debit Cash for $3,920, debit Sales Discounts for $80, and credit Accounts Receivable for $4,000 b. Debit Cash and credit Accounts...

Macro Company applied revaluation accounting to plant assets with carrying amount of P4,000,000 on January 1,...

Macro Company applied revaluation accounting to plant assets with carrying amount of P4,000,000 on January 1, 2X14, useful life of four (4) years, and no residual value. Depreciation is calculated on the straight line basis. On December 31, 2X14, independent appraisers determined that the asset has a fair value of P3,750,000. Which of the following is a correct debit/credit entry in recording the depreciation for 2X14? Which of the following is a correct debit/credit entry in recording revaluation on December...

On October 1, 2018, Joe Company purchased a truck for $24,000 with a salvage value of...

On October 1, 2018, Joe Company purchased a truck for $24,000 with a salvage value of $1,500 after its 5 years useful life. The company uses the double declining balance depreciation method. Prepare the depreciation schedule of the truck over its useful life and specify the amounts of: DDB Rate Depreciation Expense of the year 2018 Accumulated depreciation of the year 2019 Book Value at the beginning of the year 2020 Accumulated depreciation of the year 2023 Book Value at...

On June 30, 2018, Singleton Computers issued 8% stated rate bonds with a face amount of...

On June 30, 2018, Singleton Computers issued 8% stated rate bonds with a face amount of $200 million. The bonds mature on June 30, 2033 (15 years). The market rate of interest for similar bond issues was 7% (3.5% semiannual rate). Interest is paid semiannually (4.0%) on June 30 and December 31, beginning on December 31, 2018. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from...

Question