Lincraft Corp. reports a current ratio of 3 - to - 1 in its 2 0 2
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Question:
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Lincraft Corp. reports a current ratio of to in its financial statements. The statement of financial position shows current assets of $ and current liabilities of $ Lincraft has accounts receivable of $ The company transfers $ of these accounts receivable to a financial institution. There are $ of bad debts associated with these accounts receivable, an amount that is already in the allowance for doubtful accounts. Proceeds of $ are received from the transfer. The transfer is on a nonnotification basis, which means that the customers pay Lincraft and Lincraft then remit the cash to the financial institution. The customers pay $ to Lincraft on schedule, $ is written off to the allowance at the appropriate time, and the cash remittance is forwarded to the financial institution.
Required:
Record all journal entries for the sequence of events assuming:
a The transfer is recorded as a salederecognitionIf no entry is required for a transactionevent select No journal entry required" in the first account field.
b The transfer is recorded as a borrowing. If no entry is required for a transactionevent select No journal entry required" in the first account field.
Journal entry worksheet
Record the $ note payable signed on the $ received from the transfer.
Calculate the current ratio, after the initial entry for the transfer, recorded as a salederecognition and as a borrowing. Rouns answers to decimal places.
tableCurrent RatioSalederecognitionBorrowing
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