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use the highlighted information for the journal entry. On June 30, 2011, Blondie Fixtures was considering the following alternatives to bolster its cash position. Option
use the highlighted information for the journal entry. On June 30, 2011, Blondie Fixtures was considering the following alternatives to bolster its cash position. Option 1: Blondie transfers $400,000 in accounts receivable to Dogwood Finance Company without recourse for a 2% fee. Dogwood immediately remits cash to Blondie equal to 95% of the factored amount, but Dogwood retains the remaining 5% to cover its factoring fee and to provide a cushion against potential sales returns and allowances. Blondie estimates that the fair value of the 5% of the receivables is $16,000 (ignoring the factoring fee). Option 2: Blondie transfers $400,000 in receivables to Dogwood with recourse, and Blondie does not surrender control of the receivables. Dogwood's charges a 1% fee for receivables factored with recourse. Blondie estimates a $4,000 recourse liability. Dogwood immediately remits cash to Blondie equal to 95% of the factored amount, but Dogwood retains the remaining 5% to cover its factoring fee and to provide a cushion against potential sales returns and allowances. Blondie estimates that the fair value of the 5% of the receivables is $16,000 (ignoring the factoring fee). Other information: Immediately before the transfer, Blondie had total liabilities (which comprised entirely of debt) of $500,000 and total shareholders' equity of $1,000,000. Question 16: Provide any necessary journal entries for Option 1 on June 30, 2011. HTML Editor BIU A 0 0 - IE *1 x ! E V AC 12pt HA - Paragraph
use the highlighted information for the journal entry.
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