Chapter 1 Problem 6-16
Books of Motorway Company
1. Cash 2,250,000
Receivable from factor 300,000
Allowance for doubtful accounts 100,000
Loss on factoring 350,000
Accounts receivable 3,000,000
Gross amount 3,000,000
Holdback (10% x 3,000,000) ( 300,000)
Commission (15% x 3,000,000) ( 450,000)
Cash received 2,250,000
Sales price (3,000,000 x 85%) 2,250,000
Book value of accounts receivable (3,000,000 – 100,000) 2,900,000
Loss on factoring ( 350,000)
2. Cash 250,000
Receivable from factor 250,000
Accounts receivable factored 3,000,000
Collections by factor 2,500,000
Balance – December 31 500,000
Receivable from factor per book 300,000
Required holdback (10% x 500,000) 50,000
Remittance from factor 250,000
79
Books of Freeway Company (factor)
1. Accounts receivable 3,000,000
Cash 2,250,000
Clients retainer 300,000
Commission income 450,000
2. Cash 2,500,000
Accounts receivable 2,500,000
3. Clients retainer 250,000
Cash 250,000
4. Doubtful accounts 20,000
Allowance for doubtful accounts (4% x 500,000) 20,000
No comments:
Post a Comment