Question

In: Accounting

Ayayai Incorporated factored $135,100 of accounts receivable with Pina Factors Inc. on a without-recourse basis. Pina...



Ayayai Incorporated factored $135,100 of accounts receivable with Pina Factors Inc. on a without-recourse basis. Pina assesses a 3% 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 Ayayai Incorporated and Pina Factors to record the factoring of the accounts receivable to Pina. (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.)

Solutions

Expert Solution

  • Ayayai Journal Entry

Date

Account title and explanation

Debit

Credit

Cash

(135,100 – 3%*135,100 – 7%*135,100)

                 $121,590

Loss on Sale of Receivable ($135,100*3%)

                            $4,053

Due from Factor

(Pina Factor Inc.) ($135,100*7%)

                            $9,457

             Accounts Receivable

$135,100

(Entry to record sale of Receivable)

Pina Factor Inc's Journal Entry

Date

Account title and explanation

Debit

Credit

Accounts Receivable

$135,100

Financing Revenue

$    4,053

Due to Ayayai Inc.

$    9,457

Cash

$121,590

(Entry to record purchase of receivable)

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Wood Incorporated sells $150,000 of accounts receivable to Engram Factors Inc. On a with-recourse basis. Engram...
Wood Incorporated sells $150,000 of accounts receivable to Engram Factors Inc. On a with-recourse basis. Engram assesses a finance charge of 2% and retains an amount equal to 6% of accounts receivable. Wood estimates a fair value of recourse obligation to be $7500. Prepare the journal entry for (a)Wood Incorporated (b) Engram Do (1) journal entries, (2) adjusting entries, and (3) closing entries
Lucy factored $15,000,000 of accounts receivable with Ethel on a with recourse basis on May 1....
Lucy factored $15,000,000 of accounts receivable with Ethel on a with recourse basis on May 1. (Assume the transaction meets the criteria to be classified as a sale.) Ethel assessed a finance charge equal to 1% of the ARs factored. Ethel retained $100,000 to cover potential sales returns. Lucy estimated her recourse liability to be $495,000. During May and June, customers returned merchandise to Lucy on $90,000 of credit sales. All of the returns related to receivables from the $15,000,000...
Lucy factored $15,000,000 of accounts receivable with Ethel on a with recourse basis on May 1....
Lucy factored $15,000,000 of accounts receivable with Ethel on a with recourse basis on May 1. (Assume the transaction meets the criteria to be classified as a sale.) Ethel assessed a finance charge equal to 1% of the ARs factored. Ethel retained $100,000 to cover potential sales returns. Lucy estimated her recourse liability to be $495,000. During May and June, customers returned merchandise to Lucy on $90,000 of credit sales. All of the returns related to receivables from the $15,000,000...
When a company factors accounts receivable without recourse: A. The seller is said to have pledged...
When a company factors accounts receivable without recourse: A. The seller is said to have pledged its receivables. B. The factor is unable to recover any uncollected amounts from the seller. C. The factor collects amounts due and forwards them to the seller. D. Any risk of uncollectible accounts receivable resides with the seller
On May 1, Dexter, Inc. factored $1,600,000 of accounts receivable with Quick Finance on a without...
On May 1, Dexter, Inc. factored $1,600,000 of accounts receivable with Quick Finance on a without recourse basis. Under the arrangement, Dexter was to handle disputes concerning 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 Prepare the journal entry required...
On May 1, Bonita, Inc. factored $1,440,000 of accounts receivable with Quick Finance on a without...
On May 1, Bonita, Inc. factored $1,440,000 of accounts receivable with Quick Finance on a without recourse basis. Under the arrangement, Bonita was to handle disputes concerning 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. Prepare the journal entry required on...
On May 1, Dexter, Inc. factored $1,600,000 of accounts receivable with Quick Finance on a without...
On May 1, Dexter, Inc. factored $1,600,000 of accounts receivable with Quick Finance on a without recourse basis. Under the arrangement, Dexter was to handle disputes concerning service and returns of purchases. Quick Finance was to make the collections, and absorb any credit losses for bad debts. 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...
On May 1, Dexter, Inc. factored $1,600,000 of accounts receivable with Quick Finance on a without...
On May 1, Dexter, Inc. factored $1,600,000 of accounts receivable with Quick Finance on a without recourse basis. Under the arrangement, Dexter was to handle disputes concerning service and returns of purchases. Quick Finance was to make the collections, and absorb any credit losses for bad debts. 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. (d) Prepare the entry...
E7-16 (Transfer of Receivables with Recourse) Beyoncé Corporation factors $175,000 of accounts receivable with Kathleen Battle...
E7-16 (Transfer of Receivables with Recourse) Beyoncé Corporation factors $175,000 of accounts receivable with Kathleen Battle Financing, Inc. on a with recourse basis. Kathleen Battle Financing will collect the receivables. The receivables records are transferred to Kathleen Battle Financing on August 15, 2014. Kathleen Battle Financing assesses a finance charge of 2% of the amount of accounts receivable and also reserves an amount equal to 4% of accounts receivable to cover probable adjustments. Instructions (a) What conditions must be met...
Crest Textiles, Inc. factors $400,000 of accounts receivable with Commercial Factors, Inc..Crest Textiles transfers the receivable...
Crest Textiles, Inc. factors $400,000 of accounts receivable with Commercial Factors, Inc..Crest Textiles transfers the receivable records to Commercial Factors, which will receive the collections. Commercial Factors assesses a finance charge of 2 percent of the amount of accounts receivable and retains an amount equal to 5 percent of the accounts receivable for probable adjustments. Instructions: Presume it is a factoring without recourse. Then prepare any necessary journal entries for Crest Textiles and Commercial Factors, Inc. on the date of...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT