Solve these accounting question problem Mason Inc. factors $500,000 of its accounts receivables to Cannon Factors on a recourse basis.Cannon assesses a 3% finance charge of the amount of the accounts receivable and retains anamount equal to 5% of the accounts receivable for possible adjustments. Mason Inc. estimates thefair value of the recourse liability at $12,000. The amount of cash Mason Inc. received from CannonFactors at the time of the sale is:a. $500,000.b. $472,000.c. $460,000.d. $487,000.

Step 1: Define Accounts ReceivableAccounts receivable is an asset account that shows the total value…

Answered: Mason Inc. factors $500,000 of its…

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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Libby Inc. sold $500,000 of accounts receivable to Reliable Finance on a with recourse basis. Reliable Finance assesses a 4.5% finance charge on the amount of accounts receivable and retains an amount equal to 7% of accounts receivable for possible adjustments. Prepare the journal entries for Libby Incorporated and Reliable Finance to record the sale of the accounts receivable to Reliable Finance assuming that the recourse liability has a fair value of $16,000.
Vaughn Incorporated sold $166,000 of accounts receivable to Gannon Factors Inc. on a with recourse basis. Gannon assesses a 2% finance charge of the amount of accounts receivable and retains an amount equal to 6% of accounts receivable for possible adjustments. Prepare the journal entries for Vaughn Incorporated and Gannon Factors to record the sale of the accounts receivable to Gannon assuming that the recourse liability has a fair value of $9,100. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Vaughn Incorporated Gannon Factors
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