Samson Wholesale Beverage Company regularly factors its accounts receivable with the Milpitas Finance Com- pany. On April 30, 2021, the company transferred $800,000 of accounts receivable to Milpitas. The transfer was made without recourse. Milpitas remits 90% of the factored amount and retains 10%. When Milpitas collects the receivables, it remits to Samson the retained amount less a 4% fee (4% of the total factored amount). Samson estimates the fair value of the last 10% of its receivables to be $60,000. P 7-8 Factoring of accounts receivable; without recourse • LO7-8 Required: Prepare the journal entry for Samson Wholesale Beverage for the transfer of accounts receivable on April 30, assuming the sale criteria are met.
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- On December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to McLaughlin Company for cash. McLaughlin Company charges a 750 service fee, advances 85% of Jordans accounts receivable, and charges an annual interest rate of 9% on any outstanding loan balance. Prepare the related journal entries for Jordan. Refer to RE6-10. On December 31, Jordan Inc. received 50,000 on assigned accounts. Prepare Jordans journal entries to record the cash receipt and the payment to McLaughlin.SK Inc, factors $400,000 of accounts receivable with Mars Finance Company on a without recourse basis on July 1,2020. The receivables records are transferred to Mars Finance, which will receive the collections. Mars Finance assesses a finance charge of 1 ½% of the amount of accounts receivable and retains an amount equal to 4% of accounts receivable to cover sales discounts, returns, and allowances. The transaction is to be recorded as a sale. Instructions: Prepare the journal entry on July1,2020, for SK Inc. to record the sale of receivables without recourse. Prepare the journal entry on July1,2020, for Mars Finance Company. to record the purchase of receivables without recourseSK Inc, factors $400,000 of accounts receivable with Mars Finance Company on a without recourse basis on July 1,2020. The receivables records are transferred to Mars Finance, which will receive the collections. Mars Finance assesses a finance charge of 1 ½% of the amount of accounts receivable and retains an amount equal to 4% of accounts receivable to cover sales discounts, returns, and allowances. The transaction is to be recorded as a sale. Instructions: a) Prepare the journal entry on July1,2020, for SK Inc. to record the sale of receivables without recourse. b) Prepare the journal entry on July1,2020, for Mars Finance Company. to record the purchase of receivables without recourse. Answer a and b
- Vaughn Corp. factors $440,000 of accounts receivable with Bramble Finance Corporation on a without recourse basis on July 1, 2025. The receivables records are transferred to Bramble Finance, which will receive the collections. Bramble Finance assesses a finance charge of 1.90% of the amount of accounts receivable and retains an amount equal to 6% of accounts receivable to cover sales discounts, returns, and allowances. The transaction is to be recorded as a sale. (a) Prepare the journal entry on July 1, 2025, for Vaughn Corp. to record the sale of receivables without recourse. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.) Date Account Titles and Explanation July 1, 2025 Debit CreditPONTEJO FINANCE CORPORATION purchases the accounts receivable of other companies on a without recourse, notification basis. At the time the receivables are factored, 15% of the amount factored is charged to the client as commission and recognized as revenue in PONTEJO’S books. Also, 10% of the receivables factored is withheld by PONTEJO as protection against sales returns or other adjustments. This amount credited by PONTEJO to the client Retainer account. At the end of each month, payments are made by PONTEJO to its clients so that the balance in the Client Retainer account is equal to 10% of unpaid factored receivables. Based on PONTEJO’S bad debt loss experience, an allowance for bad debts of 5% of all factored receivables is to be established, PONTEJO makes adjusting entries at the end of each month. On January 3, 2023, PEPITO Company factored its accounts receivable totaling P1,000,000. By January 31, P800,000 on these receivables had been collected by…Tagum Inc. required additional cash for its operation and used accounts receivable to raise such needed cash, as follows: On December 1, 2021 Tagum Inc. assigned on a non-notification basis accounts receivable of P 5,000,000 to a bank in consideration for a loan of 90% of the receivables less 5% service fee on the accounts assigned. Tagum Inc. signed a note for the bank loan. On December 31, 2021, Tagum Inc. collected assigned accounts of P 3,000,000 less discount of P 200,000. Tagum Inc. remitted the collections to the bank in partial payment for the loan. The bank applied first the collection to the interest and the balance to the principal. The agreed interest is 1% per month on the loan balance. Tagum Inc. sold P 1,550,000 of accounts receivable for P 1,340,000 . The receivables had a carrying amount of P 1,470,000 and were sold outright on a nonrecourse basis. Tagum Inc. received an advance of P 300,000 from Union Bank by pledging P 360,000 of accounts receivable On June 30,…
- Tagum Inc. required additional cash for its operation and used accounts receivable to raise such needed cash, as follows: On December 1, 2021 Tagum Inc. assigned on a non-notification basis accounts receivable of P 5,000,000 to a bank in consideration for a loan of 90% of the receivables less 5% service fee on the accounts assigned. Tagum Inc. signed a note for the bank loan. On December 31, 2021, Tagum Inc. collected assigned accounts of P3,000,000 less discount of P 200,000. Tagum Inc. remitted the collections to the bank in partial payment for the loan. The bank applied first the collection to the interest and the balance to the principal. The agreed interest is 1% per month on the loan balance. Tagum Inc. sold P 1,550,000 of accounts receivable for P 1,340,000 . The receivables had a carrying amount of P 1,470,000 and were sold outright on a nonrecourse basis. Tagum Inc. received an advance of P 300,000 from Union Bank by pledging P 360,000 of accounts receivable On June 30, 2021,…Sheffield Corp. factors $710,000 of accounts receivable with Sage Hill Inc., Inc. on a with recourse basis. Sage Hill Inc. will collect the receivables. The receivable records are transferred to Sage Hill Inc. on August 15, 2020. Sage Hill Inc. assesses a finance charge of 2.0% of the amount of accounts receivable and also reserves an amount equal to 5.05% of accounts receivable to cover probable adjustments. Sheffield prepares financial statements under ASPE Assume the conditions for to be recorded as a sale are met. Prepare the journal entry on August 15, 2020, for Sheffield to record the sale of receivables, assuming the recourse obligation has a fair value of $5,200. (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 O for the amounts) Account Titles and Explanation Credit DebitOn December 1, 2020, Lieza Mae assigned on a non notification basis accounts receivable of P3,000,000 to a bank in consideration for a loan of 80% of the receivable less a 5% service fee on the accounts assigned. The interest rate of the loan is 12 pct . The company collected assigned accounts of P2,000,000 and remitted the collection to the bank in partial payment for the loan. The bank applied first the collection to the interest and the balance t the principal. The interest rate is 1% per month on the outstanding balance of the loan. In its Dec 15, 2020 statement of financial position what amount of notes payable should Lieza Mae report as current liability? a. 424,000 b. 1,024,000 c. None d. 400,000
- On December 1, 2020, RB Company assigned on a non-notification basis accounts receivable of Php6,000,000 to accounts less a 5% service fee on the accounts assigned. The entity signed a note for the bank loan. On December 31, 2020, the entity collected assigned accounts of Php2,000,000 less discount of Php200,000. The entity remitted the collections to the bank in partial payment for the loan. The bank applied first the collection to the interest and the balance to the principal. The agreed interest is 1% per month on the loan balance. The entity accepted sales returns of Php100,000 on the assigned accounts and wrote off assigned accounts totaling Php300,000. a bank in consideration for a loan of 80% of the What is the balance of accounts receivable assigned on December 31, 2020?On December 1, 2020, RB Company assigned on a non-notification basis accounts receivable of Php6,000,000 to accounts less a 5% service fee on the accounts assigned. The entity signed a note for the bank loan. On December 31, 2020, the entity collected assigned accounts of Php2,000,000 less discount of Php200,000. The entity remitted the collections to the bank in partial payment for the loan. The bank applied first the collection to the interest and the balance to the principal. The agreed interest is 1% per month on the loan balance. The entity accepted sales returns of Php100,000 on the assigned accounts and wrote off assigned accounts totaling Php300,000. a bank in consideration for a loan of 80% of the What is the balance of accounts receivable assigned on December 31, 2020? Your answer In the preceding problem, what is the carrying amount of the note payable on December 31, 2020? * Your answer In the preceding problem, what is the equity of the assignor in assigned accounts on…On December 1, 2020, RB Company assigned on a non-notification basis accounts receivable of Php6,000,000 to a bank in consideration for a loan of 80% of the accounts less a 5% service fee on the accounts assigned. The entity signed a note for the bank loan. On December 31, 2020, the entity collected assigned accounts of Php2,000,000 less discount of Php200,000. The entity remitted the collections to the Lbank in partial paytment for the loan. The bank applied first the collection to the interest and the balance to the principal. The agreed interest is 1% per month on the loan balance. The entity accepted sales returns of Php100,000 on the assigned accounts and wrote off assigned accounts totaling Php300,000. What is the balance of accounts receivable assigned on December 31, 2020?