2. On May 14, 2024, Gilbert Enterprises Inc. factored receivables with Sullivan Company. The receivables are factored on a with recourse basis. The following information pertains to the arrangement: Carrying value of the receivables factored Finance charge Amount withheld by factor for sales returns and allowances Fair value of recourse obligation $ 64,910 4% 5% $ 974 Gilbert Enterprises Inc. and Sullivan Company both follow ASPE. Required: 1. 2. Prepare the journal entry required by Gilbert Enterprises Inc. to account for the factoring arrangement Prepare the journal entry required by Sullivan Company to account for the factoring arrangement

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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2. On May 14, 2024, Gilbert Enterprises Inc. factored receivables with Sullivan Company. The
receivables are factored on a with recourse basis. The following information pertains to the
arrangement:
Carrying value of the receivables factored
Finance charge
Amount withheld by factor for sales returns and allowances
Fair value of recourse obligation
$
64,910
4%
5%
$
974
Gilbert Enterprises Inc. and Sullivan Company both follow ASPE.
Required:
1.
2.
Prepare the journal entry required by Gilbert Enterprises Inc. to account for the factoring
arrangement
Prepare the journal entry required by Sullivan Company to account for the factoring
arrangement
Transcribed Image Text:2. On May 14, 2024, Gilbert Enterprises Inc. factored receivables with Sullivan Company. The receivables are factored on a with recourse basis. The following information pertains to the arrangement: Carrying value of the receivables factored Finance charge Amount withheld by factor for sales returns and allowances Fair value of recourse obligation $ 64,910 4% 5% $ 974 Gilbert Enterprises Inc. and Sullivan Company both follow ASPE. Required: 1. 2. Prepare the journal entry required by Gilbert Enterprises Inc. to account for the factoring arrangement Prepare the journal entry required by Sullivan Company to account for the factoring arrangement
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