Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

- Prepare any necessary journal entry or entries if receivables are factored under Option One. - Prepare any necessary journal entry or entries if receivables

-Prepare any necessary journal entry or entries if receivables are factored under Option One. -Prepare any necessary journal entry or entries if receivables are factored under Option Two.

image text in transcribed

n June 30, 2018, Blondie Fixtures was considering alternatives to bolster its cash position. Option One called for transferring 390,000 in accounts receivable to Dogwood Finance Company without recourse for a 4% fee. Option Two calls for Blondie to transfer the $390,000 in receivables to Dogwood with recourse. Dogwood's charges a 3% fee for receivables factored with recourse. Option Two meets the conditions to be considered a sale, but Blondie estimates a $2,900 recourse liability. Under either option, Dogwood will immediately remit 85% of the factored receivables to Blondie, and retain 15%, when Dogwood collects the remaining receivables, it remits the amount, less the fee, to Blondie. Blondie estimates that the fair value of the final 15% of the receivables is $24,500 (ignoring the factoring fee) Required: 1. Prepare any necessary journal entry or entries if receivables are factored under Option One 2. Prepare any necessary journal entry or entries if receivables are factored under Option Two

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Auditing And Other Assurance Services

Authors: Ray Whittington, Kurt Pany

22nd Edition

126059808X, 978-1260598087

More Books

Students also viewed these Accounting questions