Pearl Inc. factors receivables with a carrying amount of $242,700 to Joffrey Company for $178,900 on a with recourse basis. The recourse provision has a fair value of $3,390. This transaction should be recorded as a sale. Prepare the appropriate journal entry to record this transaction on the books of Pearl Inc. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
The recourse provision has a fair value of $3,390. This transaction should be recorded as a sale.
Prepare the appropriate
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Account Titles and Explanation
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Debit
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Credit
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