Question
The controller for Marigold Corporation has reached an agreement with Martinez Financing Ltd. to sell a large portion of Marigolds past-due accounts receivable. Marigold agrees
The controller for Marigold Corporation has reached an agreement with Martinez Financing Ltd. to sell a large portion of Marigolds past-due accounts receivable. Marigold agrees to sell $2,174,000 of accounts receivable to Martinez with recourse. Marigolds controller estimates that the fair value of Marigolds liability to pay Martinez for uncollectible accounts is $175,000. Martinez will charge Marigold 8% of the total receivables balance as a financing fee, and will withhold an initial amount of 9%.
Calculate the net proceeds and the gain or loss on the sale of receivables to Martinez Financing Ltd.
Net proceeds $ ?
Loss or Gain on sale of receivables $ ?
Prepare the journal entry on the books of Marigold Corporation to record the sale of receivables to Martinez Financing Ltd.
Additional Problem 3 Accounts Payable Accounts Receivable Accrued Liabilities Accumulated Depreciation Advances to Employees Advertising Expense Allowance for Doubtful Accounts Bad Debt Expense Cash Cash Over and Short Delivery Expense Due from Factor Due to Customer Equipment Finance Expense Finance Revenue Freight-in Freight-out Gain on Sale of Equipment Gain on Sale of Land Interest Expense Interest Income Interest Receivable Inventoryy Land Loss on Impairment Loss on Sale of Receivables Miscellaneous Expense No Entry Notes Payable Notes Receivable Office Expense Bank Charges Office Expense Other Petty Cash Prepaid Expenses Purchase Discounts Recourse Liability Sales Discounts Sales Discounts Forfeited Sales Returns and Allowances Sales Revenue Servicing Liabilities Service Revenue Supplies Supplies Expense Unearned RevenueStep by Step Solution
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