Lycamah Annotati0 Freemont Factors provides financing to other companies by purchasing their accounts receivable on a nonrecourse basis. Freemont charges its clients a commission of 15% of all receivables factored. In addition, Freemont withholds 10% of receivables factored as protection against sales returns or other adjustments. Freemont credits the 10% withheld to Client Retainer and makes payments to clients at the end of each month so that the balance in the retainer is equal to 10% of unpaid receivables at the end of the month. Freemont recognizes its 15% commissions as revenue at the time the receivables are factored. Also, experience has led Freemont to establish an Allowance for Bad Debts of 4% of all receivables purchased. On January 4, 2015, Freemont purchased receivables from Detmer Company totaling $1,500,000 . Detmer had previously established an Allowance for Bad Debts for these receivables of $35,000 . By January 31, Freemont had collected $1,200,000 on these receivables. Drovin Instructions: 1. Prepare the entries necessary on Freemont's books to record the preceding information. Freemont makes adjusting entries at the end of every month. 2. Prepare the entries on Detmer's books to record the preceding information. tra nd purch on bool 10,000 2016. Next
Lycamah Annotati0 Freemont Factors provides financing to other companies by purchasing their accounts receivable on a nonrecourse basis. Freemont charges its clients a commission of 15% of all receivables factored. In addition, Freemont withholds 10% of receivables factored as protection against sales returns or other adjustments. Freemont credits the 10% withheld to Client Retainer and makes payments to clients at the end of each month so that the balance in the retainer is equal to 10% of unpaid receivables at the end of the month. Freemont recognizes its 15% commissions as revenue at the time the receivables are factored. Also, experience has led Freemont to establish an Allowance for Bad Debts of 4% of all receivables purchased. On January 4, 2015, Freemont purchased receivables from Detmer Company totaling $1,500,000 . Detmer had previously established an Allowance for Bad Debts for these receivables of $35,000 . By January 31, Freemont had collected $1,200,000 on these receivables. Drovin Instructions: 1. Prepare the entries necessary on Freemont's books to record the preceding information. Freemont makes adjusting entries at the end of every month. 2. Prepare the entries on Detmer's books to record the preceding information. tra nd purch on bool 10,000 2016. Next
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
writedown the answer please
Transcribed Image Text:Lycamah
Annotati0
Freemont Factors provides financing to other
companies by purchasing their accounts receivable on a
nonrecourse basis. Freemont charges its clients a
commission of 15% of all receivables factored. In
addition, Freemont withholds 10% of receivables
factored as protection against sales returns or other
adjustments. Freemont credits the 10% withheld to
Client Retainer and makes payments to clients at the
end of each month so that the balance in the retainer is
equal to 10% of unpaid receivables at the end of the
month. Freemont recognizes its 15% commissions as
revenue at the time the receivables are factored. Also,
experience has led Freemont to establish an Allowance
for Bad Debts of 4% of all receivables purchased.
On January 4, 2015, Freemont purchased receivables
from Detmer Company totaling $1,500,000 . Detmer
had previously established an Allowance for Bad Debts
for these receivables of $35,000 . By January 31,
Freemont had collected $1,200,000 on these
receivables.
Drovin
Transcribed Image Text:Instructions:
1. Prepare the entries necessary on Freemont's
books to record the preceding information.
Freemont makes adjusting entries at the end of
every month.
2. Prepare the entries on Detmer's books to record
the preceding information.
tra
nd
purch
on
bool
10,000
2016.
Next
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