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The controller for Marigold Corporation has reached an agreement with Martinez Financing Ltd. to sell a large portion of Marigold's 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 Marigold's past-due accounts receivable. Marigold agrees to sell $1,890,000 of accounts receivable to Martinez with recourse. Marigold's controller estimates that the fair value of Marigold's liability to pay Martinez for uncollectible accounts is $170,000. Martinez will charge Marigold 7% of the total receivables balance as a financing fee, and will withhold an initial amount of 8%. Calculate the net proceeds and the gain or loss on the disposal of receivables to Martinez Financing Ltd. Net proceeds $ 1606500 Loss on disposal of receivables $ 302300 Prepare the journal entry on the books of Marigold Corporation to record the disposal of receivables to Martinez Financing Ltd. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts.) Credit Account Titles and Explanation Cash Debit 1606500 Due from Factor 151200 Loss on Disposal of Receivables 302300 Recourse Liability 170000 Accounts Receivable 1890000
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