The trial balance before adjustment for Sheridan Company shows the following balances. Dr. Cr. Accounts receivable...

The trial balance before adjustment for Sheridan Company shows the following balances.

	Dr.	Cr.
Accounts receivable	$88,000
Allowance for doubtful accounts	2,300
Sales revenue		$489,400

The following cases are independent:

1.		To obtain cash, Sheridan factors without recourse $19,900 of receivables with Anila Finance. The finance charge is 11% of the amount factored.
2.		To obtain a one-year loan of $56,000, Sheridan assigns $67,100 of specific accounts receivable to Ruddin Financial. The finance charge is 8% of the loan; the cash is received.
3.		The company wants to maintain the Allowance for Doubtful Accounts at 4% of gross accounts receivable.
4.		The company wishes to increase the allowance account by 1.50% of sales. PASS JOURNAL ENTRIES FOR THE FOLLOWING.

Expert Solution

Sr No	Account Titles and Explanation	Debit ($)	Credit ($)
1	Cash	17,711
	Loss on Sale of Receivables (19,900*11%)	2,189
	Accounts Receivable		19,900
	(To record factoring of receivables)

2	Cash	51,520
	Interest Expense (56,000*8%)	4,480
	Notes Payable		56,000
	(To record loan received)

3	Bad Debts Expense ((88,000*4%)+2,300)	5,820
	Allowance for Doubtful Accounts		5,820
	(To record allowance for doubtful accounts)

4	Bad Debts Expense (489,400*1.50%)	7,341
	Allowance for Doubtful Accounts		7,341
	(To record allowance for doubtful accounts)

ekkarill92 answered 3 years ago

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