Question
Presented below is information for Kingbird, Inc. for 2017: 1. Beginning-of-the-year Accounts Receivable balance was $183,000. 2. Net sales for the year were $1,725,000. $170,000
Presented below is information for Kingbird, Inc. for 2017: 1. Beginning-of-the-year Accounts Receivable balance was $183,000. 2. Net sales for the year were $1,725,000. $170,000 of the sales were cash sales. Kingbird does not offer cash discounts for early payment. 3. Collections on accounts receivable during the year were $1,497,000. Kingbird plans to factor accounts receivable totaling $70,000 at the end of the year. Kingbird will transfer the accounts to Herzog Factors, Inc. with recourse. Herzog Factors will retain 3% of the balances for probable adjustments and assesses a finance charge of 5%. The fair value of the recourse obligation is $2,500.
Prepare the journal entry to record the sale of the receivables.
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