Question
1) HomerCo. factors $300,000 of accounts receivable with a factor company on a with recourse basis. The factor will collect the receivables. The receivables records
1) HomerCo. factors $300,000 of accounts receivable with a factor company on a "with recourse" basis. The factor will collect the receivables. The receivables records are transferred to the factor on December 31, 2020. The factor assesses a finance fee of 2% of the amount of accounts receivable and also reserves an amount equal to 5% of accounts receivable to cover probable sales returns and adjustments. Prepare the journal entry on December 31, 2020 for HomerCo. to record the sale of receivables, assuming the recourse liability has a fair value of $5,000. Use cell referencing where possible for easy editing and "what if" analysis.
2)Record the adjusting journal entry on December 31, 2020 based on the bank reconciliation below
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