Sheridan Incorporated factored $134,400 of accounts receivable with Engram Facto

Question

Sheridan Incorporated factored $134,400 of accounts receivable with Engram Factors Inc. on a with recourse basis. Engram assesses a 3% finance charge of the amount of accounts receivable and retains an amount equal to 7% of accounts receivable for possible adjustments.

Prepare the journal entry for Sheridan to record the sale, assuming that the recourse liability has a fair value of $7,590. (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.)

Account Titles and Explanation

Debit

Credit

Account Titles and Explanation

Debit

Credit

Explanation / Answer

Journal entry :

Account Titles and Explanation

Date

Account Titles and Explanation

Debit credit Cash 120960 Due from factor 4032 Loss from receivable 16998 Account receivable 134400 Recourse liability 7590

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