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1. The Lumber Company obtains financing from Midwest Finance Company by factoring 1,000,000 of accounts receivable ce, retains an amount equal to 20% of accounts
1. The Lumber Company obtains financing from Midwest Finance Company by factoring 1,000,000 of accounts receivable ce, retains an amount equal to 20% of accounts receivable to cover sales discounts, returns, and allowances and assesses a finance charge of 3% of the total factored amount. When receivables are collected by Midwest, the retained amount will be remitted to Hollywood Lumber. At the time of the transaction, the recourse obligation has a fair value of $10,000. On November 17, 2021, its receivables. During June 1, 2021, the company factored $ to Midwest. The transfer was made with recourse. The factor, Midwest Finan Midwest pays $185,000 as a final settlement of all collections. Required (9 points) ecord all necessary journal entries for Hollywood Lumber on July 1t and November 17" 2. On March 1, 2021, Santa Teresa Company borrowed $500,000 from Finance Bank and signed a promissory note, interest at 12% is payable monthly. The company assigned $620,000 of its accounts receivable as collateral for the loan. Finance Bank charges a finance fee equal to 1.5% of the accounts receivable assigned. The assignment agreement calls for Santa Teresa to continue to collect the receivables. During March, Rand, Inc. collects $130,000 in cash from customers on the assigned receivables Required (7 points) Record all necessary journal entries for Santa Teresa for the month of March
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