Question 2

The trial balance before adjustment for Windsor Company shows the following balance

Dr.

Cr.

Accounts Receivable $82,200

Allowance for Doubtful Accounts 3,310

Sales Revenue $440,800

Using the data above, give the journal entries required to record each of the following cases. (Each situation is independent.)

1. To obtain additional cash, Windsor factors without recourse $26,400 of accounts receivable with Stills Finance.

The finance charge is10% of the amount factored.

2. To obtain a 1-year loan of $57,200, Windsor assigns $73,900 of specific receivable accounts to Crosby Financial. The finance charge is8% of the loan; the cash is received and the accounts turned over to Crosby Financial.

3. The company wants to maintain the Allowance for Doubtful Accounts at5% of gross accounts receivable.

4.Based on an aging analysis, an allowance of $5,746 should be reported. Assume the allowance has a credit balance of $1,181.