Company Z factors $200,000 of accounts receivable with Company A. The finance charge is 2% of...

Company Z factors $200,000 of accounts receivable with Company A. The finance charge is 2% of accounts receivable. Company A retains an amount equal to 3% of accounts receivable. Record the journal entries for both Company Z and Company A if the sale was on a (1) without recourse basis and again on a (2) with recourse basis. Assume that Company Z estimates a recourse obligation with a fair value of $2,000.

Expert Solution

ekkarill92 answered 1 year ago

1. Samson Wholesale Beverage Company regularly factors its accounts receivable with the Milpitas Finance Company. On...

1. Samson Wholesale Beverage Company regularly factors its accounts receivable with the Milpitas Finance Company. On April 30, 2021, the company transferred $920,000 of accounts receivable to Milpitas. The transfer was made without recourse. Milpitas remits 85% of the factored amount and retains 15%. When Milpitas collects the receivables, it remits to Samson the retained amount less a 2% fee (2% of the total factored amount). Samson estimates the fair value of the last 15% of its receivables to be...

Vaughn Manufacturing factors $5900000 of its accounts receivables with recourse for a finance charge of 5%....

Vaughn Manufacturing factors $5900000 of its accounts receivables with recourse for a finance charge of 5%. The finance company retains an amount equal to 9% of the accounts receivable for possible adjustments. Vaughn estimates the fair value of the recourse liability at $225000. What would be recorded as a gain (loss) on the transfer of receivables? A. Gain of $1051000. B. Loss of $225000. C. Gain of $295000. D. Loss of $520000.

A company has net income of $200,000, a profit margin of 7%, and an accounts receivable...

A company has net income of $200,000, a profit margin of 7%, and an accounts receivable balance of $120,000. Assuming 100% of sales are on credit, what is the company's days' sales in receivables?

Benny Company had a beginning balance on January 1, 2019 in Accounts Receivable of $200,000 and...

Benny Company had a beginning balance on January 1, 2019 in Accounts Receivable of $200,000 and a beginning credit balance in the Allowance for Doubtful Accounts of $4,000. During 2019, Drew sold $1,000,000 of goods on credit and collected $800,000. If Drew estimates that 2% of their ending accounts receivable will eventually not be collected, the adjusting journal entry for the Bad Debt Expense will include a credit to Allowance for Doubtful Accounts of A. none of the listed choices...

Indicate the essential functions of the accounts receivable administration and the related tasks. Finance company A...

Indicate the essential functions of the accounts receivable administration and the related tasks. Finance company A finance company grants credits with various terms, partly on security and partly blank. Second or third mortgages are accepted as security. Collateral in the form of cars, boats and the like are accepted as well. Credits may be granted at a fixed interest percentage during the entire credit term, or at percentages which are adapted monthly to market developments. Monthly installments are either fixed...

Blossom Company had accounts receivable of $200,000 on January 1, 2020. The only transactions that affected...

Blossom Company had accounts receivable of $200,000 on January 1, 2020. The only transactions that affected accounts receivable during 2020 were net credit sales of $1,125,000, cash collections of $1,025,000, and accounts written off of $50,000. Compute the ending balance of accounts receivable. Ending balance of accounts receivable $ LINK TO TEXT Compute the accounts receivable turnover for 2020. (Round answer to 0 decimal places, e.g. 25.) Accounts receivable turnover LINK TO TEXT Compute the average collection period in days....

Pharoah Company finances some of its current operations by assigning accounts receivable to a finance company....

Pharoah Company finances some of its current operations by assigning accounts receivable to a finance company. On July 1, 2020, it assigned, under guarantee, specific accounts amounting to $345,000. The finance company advanced to Pharoah 80% of the accounts assigned (20% of the total to be withheld until the finance company has made its full recovery), less a finance charge of 0.50% of the total accounts assigned. On July 31, Pharoah Company received a statement that the finance company had...

Shamrock Company finances some of its current operations by assigning accounts receivable to a finance company....

Shamrock Company finances some of its current operations by assigning accounts receivable to a finance company. On July 1, 2017, it assigned, under guarantee, specific accounts amounting to $180,000. The finance company advanced to Shamrock 80% of the accounts assigned (20% of the total to be withheld until the finance company has made its full recovery), less a finance charge of 0.40% of the total accounts assigned. On July 31, Shamrock Company received a statement that the finance company had...

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...

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

Question