Anche Company has organized its accounts receivable by customer and how long each receivable has been outstanding. Anche records bad debt expense based on an analysis of an aged schedule. The following information is as of the end of the year (December 31):

At the beginning of the year, Anche had accounts receivable of $ 500,000 and a credit balance of $ 30,000 in its allowance for uncollectible accounts. During the year, it wrote off specific accounts receivable in the amount of $ 80,000. Assume no recoveries of write-offs during the year.

Required
a. Compute bad debt expense for the year ending December 31 and the net realizable value of Anche€™s accounts receivable as of December 31.
b. Prepare the journal entry to record the bad debt expense for the year.
c. Independent of the information used in parts (a) and (b), assume that on January 1 of the current year, with the net realizable value of accounts receivable equal to $ 470,000, the company decided to factor $ 400,000 of accounts receivable to Gustav Factors, LTD. Gustav retains 6% of the amount factored as a reserve or hold back. Gustav Factors also charged Anche a 4% financing fee (4% of the total factored amount). As a result, only 90% of the proceeds are remitted.
i. Prepare the journal entry to record the factoring of $ 400,000 of accounts receivable assuming that Anche sold the receivables without recourse.
ii. Prepare the journal entry to record the factoring of $ 400,000 of accounts receivable assuming that Anche sold the receivables with recourse and the recourse obligation is estimated to be $ 5,000.

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Days Past Due Customer # 10901 10902 10003 10904 10005 10906 Totals % Uncollectible Total Due Current 1-30 Days 31-60 Days Over 60 Day 70,000 S60,000 60,000 170,000 30,000 50,000 110,000 10,000 10.000 20,000 20,000 $10,000 20,000 20,000 50,000 150,000 10,000 S20,000 90,000 $490,000 S350,000 $100,000 $20,000 $20,000 2% 5% 30% 95%