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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 entered. Do not indent manually.) Account Titles and Explanation Debit Credit

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Expert Solution

The journal entry will be:

Particulars Debit Credit
Cash    178,600
Loss on sales receivable / Factoring fee      57,770
Recourse liability                   2,870
Accounts receivable               233,500

Calculations:

Net proceeds:
Cash received    178,600
less: recourse liability         2,870
Net proceeds    175,730
Gain/loss:
Carrying value    233,500
less: net proceeds    175,730
Loss      57,770

(Note in the journal entry above the 'loss on sales receivebale' account can also be replaced with the 'factoring fee' account. This will depend on the drop down options available to you. The amount will be the same i.e. 57,770)

ekkarill92 answered 2 years ago
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