Marie Company has significant amounts of trade accounts receivable as a result of credit sales to its customers On October 2, 2007, some trade accounts receivable were assigned to Daniel Finance Company on a with recourse, nonnotification basis for an advance of 75 of their amount at an interest ch...

1 Because the trade accounts receivable are assigned on a withrecourse nonnotification basis Marie C ...

Marie Company has significant amounts of trade accounts receivable as a result of credit sales to its

Question:

Marie Company has significant amounts of trade as a result of credit sales to its customers. On October 2, 2007, some trade were assigned to Daniel Finance Company on a with-recourse, nonnotification basis for an advance of 75% of their amount at an interest charge of 20% on the balance outstanding. On November 3, 2007, other trade were factored on a without-recourse basis. The factor withheld 5% of the trade factored as protection against sales returns and allowances and charged a finance charge of 3%.

Required
1. How should Marie account for subsequent collections on the trade assigned on October 2, 2007, and the payments to Daniel Finance? Why?
2. How should Marie account for the trade factored on November 3, 2007? Why?

Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...