Question
In: Accounting
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 1 year agoRelated Solutions
Assets: Thompson Inc. Panna Corporation Carrying Amount Carrying Amount Fair value Cash $400,000 $10,000 $10,000 Accounts...
Assets:
Thompson Inc.
Panna Corporation
Carrying Amount
Carrying Amount
Fair value
Cash
$400,000
$10,000
$10,000
Accounts receivable
80,000
25,000
22,000
Inventory
100,000
70,000
75,000
Plant
500,000
165,000
175,000
Patents
100,000
25,000
25,000
Trade marks
-
-
20,000
Goodwill
120,000
10,000
10,000
Total Assets
1,300,000
305,000
Liabilities and Equity:
Current liabilities
$160,000
55,000
60,000
Long-term liabilities
100,000
65,000
60,000
Common shares (At $10 per share)
1,000,000
100,000
Retained earnings
40,000
85,000
Total liabilities and equity
1,300,000
305,000
Suppose Thompson Inc. purchased...
Assets: Thompson Inc. Panna Corporation Carrying Amount Carrying Amount Fair value Cash $400,000 $10,000 $10,000 Accounts...
Assets:
Thompson Inc.
Panna Corporation
Carrying Amount
Carrying Amount
Fair value
Cash
$400,000
$10,000
$10,000
Accounts receivable
80,000
25,000
22,000
Inventory
100,000
70,000
75,000
Plant
500,000
165,000
175,000
Patents
100,000
25,000
25,000
Trade marks
-
-
20,000
Goodwill
120,000
10,000
10,000
Total Assets
1,300,000
305,000
Liabilities and Equity:
Current liabilities
$160,000
55,000
60,000
Long-term liabilities
100,000
65,000
60,000
Common shares (At $10 per share)
1,000,000
100,000
Retained earnings
40,000
85,000
Total liabilities and equity
1,300,000
305,000
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are presented below.
CONCORD COMPANY
COMPARATIVE BALANCE SHEET
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2020
2019
Cash
$1,800
$1,130
Receivables
1,770
1,320
Inventory
1,560
1,890
Plant assets
1,900
1,700
Accumulated depreciation
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Long-term investments (held-to-maturity)
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1,430
$7,110
$6,290
Accounts payable
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$890
Accrued liabilities
190
250
Bonds payable
1,410
1,520
Common stock
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1,730
Retained earnings
2,420
1,900
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$6,290
ONCORD COMPANY
INCOME STATEMENT
FOR...
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Tax
Basis
Future Taxable
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Amount
Buildings and equipment (net of accumulated depreciation)
$
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$
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Prepaid insurance
54
0
54
Liability—loss contingency
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