The Knitline Corp. manufactures sweaters for sale to athletic-wear retailers. The following information was available on Knitline for the year ended December 31, 2019 and 2020:

During 2020, Knitline had the following transactions:

1. On June 1, 2020, sales of $75,000 to a major customer were settled, with Knitline accepting a $75,000, one-year note bearing 6% interest that is payable at maturity. The $75,000 is not included in the total credit sales amount above.

2. Knitline factors some accounts receivable at the end of the year. Accounts totalling $70,000 are transferred to Samarisk Inc., with recourse. Samarisk retains 4% of the balances, and will receive the collections directly form Knitline's customers. Knitline is assessed a finance charge of 5% on this transfer. The fair value of the recourse obligation is $6,400.

3. Knitline wrote of $3,800 of accounts receivable during 2020.

4. Based on the latest available information, the 2020 allowance for doubtful accounts should have a balance of $11,300 at December 31, 2020.

Additional Information:

Included in the cash balance at December 31, 2020, are the following: a chequing account with a balance of $9,400, postage stamps of $100, petty cash of $400, coins and currency on hand of $3,400, and postdated cheques from customers of $2,700. Knitline is a private company that follows ASPE.

a) Prepare the Journal entry for the sale to the customer from June 1.

b) Prepare the journal entry for the factoring of the accounts receivable to Samarisk Inc.

c) Based on the above transactions and additional information, determine the balances of Accounts Receivable and Bad Debt Expense at December 31, 2020.

d) Prepare the current assets section of Knitline's Statement of financial position at December 31, 2020. (List Assets in order of liquidity)

e) Calculate the current ratios for Knitline for 2019 and 2020.

f) Calculate the receivables turnover ratio for Knitline for 2020. Knitline receivables turnover ratio for 2019 was 3.50 times. Does this ratio show improvement or deterioration.

g) Calculate the current and accounts receivable turnover rations if Knitline had decided to assign $37,500 of accounts receivable instead of factoring any accounts receivable to Samarisk Inc.

12/31/19 12/31/20 $16,000 $17,300 82,000 Cash Accounts receivable Allowance for doubtful accounts 8,500 90,500 88,000 Inventory Current liabilities 82,000 88,000 Total credit sales 570,000 520,000 503,000 Collections on accounts receivable 443,000 12/31/19 12/31/20 $16,000 $17,300 82,000 Cash Accounts receivable Allowance for doubtful accounts 8,500 90,500 88,000 Inventory Current liabilities 82,000 88,000 Total credit sales 570,000 520,000 503,000 Collections on accounts receivable 443,000