The trial balance before adjustment for Shamrock Company shows the following bal
ID: 2508809 • Letter: T
Question
The trial balance before adjustment for Shamrock Company shows the following balances. Dr. Cr. Accounts Receivable $82,300 Allowance for Doubtful Accounts 3,700 Sales Revenue $467,700
Using the data above, give the journal entries required to record each of the following cases. (Each situation is independent.)
1. To obtain additional cash, Shamrock factors without recourse $21,500 of accounts receivable with Stills Finance. The finance charge is 12% of the amount factored.
2. To obtain a 1-year loan of $64,600, Shamrock assigns $67,200 of specific receivable accounts to Crosby Financial. The finance charge is 8% of the loan; the cash is received and the accounts turned over to Crosby Financial.
3. The company wants to maintain the Allowance for Doubtful Accounts at 5% of gross accounts receivable.
4. Based on an aging analysis, an allowance of $5,318 should be reported. Assume the allowance has a credit balance of $1,175.
Explanation / Answer
Loss on factoring [21500*.12]
No. Account Debit credit 1 cash 18920Loss on factoring [21500*.12]
2580 Accounts receivable 21500 2 cash 59432 Finance charges [64600 * .08] 5168 Note payable 64600 3 Bad debt expense 415 Allowance for Doubtful Accounts 415 [Estimated uncollectible account :82300*.05=4115-3700 credit balance = 415 4 Bad debt expense 4143 Allowance for Doubtful Accounts 4143 [Bad debt = Estimated uncollection 5318-1175 credit balance]Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.