Exercise 7-18 Concord Corporation factors $260,800 of accounts receivable with K

Question

Exercise 7-18 Concord Corporation factors $260,800 of accounts receivable with Kathleen Battle Financing, Inc. on a with recourse basis. Kathleen Battle Financing will collect the receivables. The receivables records are transferred to Kathleen Battle Financing on August 15, 2017, Kathleen Battle Financing assesses a finance charge of 2% of the amount of accounts receivable and also reserves an amount equal to 4% of accounts receivable to cover probable adjustments. (b) Assume that the conditions are met for the transfer of receivables with recourse to be accounted for as a sale. Prepare the journal entry on August 15, 2017, for Concord to record the sale of receivables, assuming the recourse liability has a fair value of $5,000. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Aug. 15, 2017

Explanation / Answer

SOLUTION:

Cash 245152 Due from Factor (260,800*4%) 10,432 Loss on sale of receivable (260,800*2%) 10,216 Accounts (Notes) Receivable 260,800 Recourse Liability 5,000

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.