Factoring of Receivables

Factoring of receivables Impassive Company is bothered about the cash position as collections of accounts receivable are delayed and obligations are currently maturing. The entity had the following accounts receivable at year -end: Accounts receivable 500000 Allowance for doubtful accounts !0000 "ec ause of the cr iti cal cash positi on the ent ity fac tor ed the accounts re cei vab le for #$00000 %e&uired: #repare 'ournal entry to record the factoring of the accounts receivable. Factoring of receivables (ainty Company sold accounts r eceivable without r ecourse with face amount of #)000000 the factor charged *5+ commission on all accounts receivab le factored and withheld *0+ of the accounts factored as pr otection against customer returns and other ad'ustments. %e&uired: #repare 'ournal entries to record the factoring and the subse&uent collection of the factor,s holdbac. Factoring of receivables enerous Company provided the following information with respect to factoring of accounts receivable. /uly * actored #100000 of accounts receiv able without recours e with a ban on noti2cation basis. The ban charged a factoring fee of 5+ of the amount of accounts receivable factored and withheld *0+ of the accounts receivable factored to cover sales return and allowances. /uly *5 %ec eived notice from the ban that factored accounts are fully collected less sales return and allowances of #30000 /uly !* %eceived a chec from the ban as a 2nal settlement of th e factoring contr act. %e&uired: #repare 'ournal entries to record the transactions. Factoring of receivables Commonplace Company provided the following transactions for the current year. /une * 4old merch andised to a customer for # 500000 terms 3*0n!0. ! actored the account to a ban. The ban charged 5+ commission and 35+ holdbac.

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Transcript of Factoring of Receivables

7/18/2019 Factoring of Receivables

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Factoring of receivables

Impassive Company is bothered about the cash position as collections of accountsreceivable are delayed and obligations are currently maturing.

The entity had the following accounts receivable at year-end:

Accounts receivable 500000Allowance for doubtful accounts !0000

"ecause of the critical cash position the entity factored the accounts receivable for#$00000

%e&uired:#repare 'ournal entry to record the factoring of the accounts receivable.

Factoring of receivables

(ainty Company sold accounts receivable without recourse with face amount of #)000000the factor charged *5+ commission on all accounts receivable factored and withheld *0+ of the accounts factored as protection against customer returns and other ad'ustments.

%e&uired:

#repare 'ournal entries to record the factoring and the subse&uent collection of the factor,sholdbac.

Factoring of receivables

enerous Company provided the following information with respect to factoring of accountsreceivable.

/uly * actored #100000 of accounts receivable without recourse with a ban onnoti2cation basis.

The ban charged a factoring fee of 5+ of the amount of accounts receivablefactored and withheld *0+ of the accounts receivable factored to cover sales returnand allowances.

/uly *5 %eceived notice from the ban that factored accounts are fully collected less salesreturn and allowances of #30000

/uly !* %eceived a chec from the ban as a 2nal settlement of the factoring contract.

%e&uired:#repare 'ournal entries to record the transactions.

Factoring of receivables

Commonplace Company provided the following transactions for the current year.

/une * 4old merchandised to a customer for #500000 terms 3*0n!0.

! actored the account to a ban. The ban charged 5+ commission and 35+holdbac.