2. On May 14, 2024, Gilbert Enterprises Inc. factored receivables with Sullivan Company. Thereceivables are factored on a with recourse basis. The following information pertains to thearrangement:Carrying value of the receivables factoredFinance chargeAmount withheld by factor for sales returns and allowancesFair value of recourse obligation$64,9104%5%$974Gilbert Enterprises Inc. and Sullivan Company both follow ASPE.Required:1.2.Prepare the journal entry required by Gilbert Enterprises Inc. to account for the factoringarrangementPrepare the journal entry required by Sullivan Company to account for the factoringarrangement

First, we need to calculate the amount received by Gilbert Enterprises Inc. from the factoring…

Answered: 2. On May 14, 2024, Gilbert Enterprises…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Lincoln Company purchased merchandise from Grandville Corp, on September 30, 2021. Payment was made in the form of a noninterest-bearing note requiring Lincoln to make six annual payments of $5,200 on each September 30, beginning on September 30, 2024 (EV of $1. PV of $1. EVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided. Round your final answer to nearest whole dollar amount.) Required: Calculate the amount at which Lincoln should record the note payable and corresponding purchases on September 30, 2021, assuming that an interest rate of 11% properly reflects the time value of money in this situation Amount recorded
Research Case 7-9 (Static) Locate and extract relevant information and authoritative support for a financial reporting issue; financing with receivables [LO7-8] You are spending the summer working for a local wholesale furniture company, Samson Furniture, Inc. The company is considering a proposal from a local financial institution, Old Reliant Financial, to factor Samson's receivables. The company controller is unfamiliar with the prevailing GAAP that deals with accounting for the transfer of financial assets and has asked you to do some research. The controller wants to make sure the arrangement with the financial institution is structured in such a way as to allow the factoring to be accounted for as a sale. Old Reliant has offered to factor all of the company's receivables on a "without recourse" basis. Old Reliant will remit to Samson 90% of the factored amount, collect the receivables from Samson's customers, and retain the remaining 10% until all of the receivables have been…
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Metlock Corporation factors $251,700 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, 2025. 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 a transfer of receivables with recourse to be accounted for as a sale. Prepare the journal entry on August 15, 2025, for Metlock to record the sale of receivables, assuming the recourse obligation has a fair value of $5,010. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.) Date Aug. 15, 2025 Account…
Vaughn Corp. factors $440,000 of accounts receivable with Bramble Finance Corporation on a without recourse basis on July 1, 2025. The receivables records are transferred to Bramble Finance, which will receive the collections. Bramble Finance assesses a finance charge of 1.90% of the amount of accounts receivable and retains an amount equal to 6% of accounts receivable to cover sales discounts, returns, and allowances. The transaction is to be recorded as a sale. (a) Prepare the journal entry on July 1, 2025, for Vaughn Corp. to record the sale of receivables without recourse. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.) Date Account Titles and Explanation July 1, 2025 Debit Credit
On July 1, 2021, A Company sold goods to a customer for P540,000 in exchange for a 4-year, 12% non-interest bearing note with a face amount of P894,697.80. The goods have a cost of P354,000. Determine the net income related the the sale of goods.
On June , 2019 , XYZ Company factored receivables of \$700,000 to ABC Company . ABC Company assesses a finance charge of 1% of the receivables and retains 4% of the receivables . Assume that XYZ Company factors the receivables on a without guarantee (without recourse ) basis . The journal entry to be recorded by XYZ company is:
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Zing Cell Phone Company entered into the following transactions involving current liabilities during 2023 and 2024: 2023 Mar. 14 Purchased merchandise on credit from Ferris Inc. for $138,000. The terms were 1/10, n/30 (assume a perpetual inventory system). Apr. 14 Zing paid $24,000 cash and replaced the $114,000 remaining balance of the account payable to Ferris Inc. with a 5%, 60-day note payable. 21 Borrowed $124,000 from Scotiabank by signing a 4.5%, 90-day note. ? Paid the note to Ferris Inc. at maturity. ? Paid the note to Scotiabank at maturity. Dec. 15 Borrowed $99,000 and signed a 5.25%, 120-day note with National Bank. Recorded an adjusting entry for the accrual of interest on the note to National Bank. May Dec. 31 2024 ? Paid the note to National Bank at maturity. Required: 1. Determine the maturity dates of the three notes just described. Maturity date Ferris Inc. Scotiabank National Bank
Waterway Inc. had the following long-term receivable account balances at December 31, 2019. Note receivable from sale of division Note receivable from officer Transactions during 2020 and other information relating to Waterway's long-term receivables were as follows. 1. 2 3. 4. (a) $1,500,000 405,200 (b) The $1,500,000 note receivable is dated May 1, 2019, bears interest at 9%, and represents. the balance of the consideration received from the sale of Waterway's electronics division to New York Company. Principal payments of $500,000 plus appropriate interest are due on May 1, 2020, 2021, and 2022. The first principal and interest payment was made on May 1, 2020, Collection of the note installments is reasonably assured. (s) The $405,200 note receivable is dated December 31, 2019, bears interest at 8%, and is due on December 31, 2022. The note is due from Sean May, president of Waterway Inc. and ist collateralized by 10.130 shares of Waterway's common stock. Interest is payable…

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