Presented below is information related to Samhan Trading Corp. Prepare necessary entries in general journal form for Samhan with terms 2/10, n/60. a. Account receivable of OMR 24,000 (gross) are factored with Salem Credit Corp, without guarantee at a financing charge of 7%. Cash is received for the proceeds; collections are handled by the finance company (These accounts were past the discount period). b. Specific account receivable of OMR 12,000 (gross) are pledged to Salem Credit Corp, as a security of a loan of OMR 8,000 at a finance charge of 5% of the amount of loan. The finance company will make the collection (These accounts were past the discount period).
Presented below is information related to Samhan Trading Corp. Prepare necessary entries in general journal form for Samhan with terms 2/10, n/60. a. Account receivable of OMR 24,000 (gross) are factored with Salem Credit Corp, without guarantee at a financing charge of 7%. Cash is received for the proceeds; collections are handled by the finance company (These accounts were past the discount period). b. Specific account receivable of OMR 12,000 (gross) are pledged to Salem Credit Corp, as a security of a loan of OMR 8,000 at a finance charge of 5% of the amount of loan. The finance company will make the collection (These accounts were past the discount period).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
Question
Presented below is information related to Samhan Trading Corp. Prepare necessary entries
in general journal form for Samhan with terms 2/10, n/60.
a. Account receivable of OMR 24,000 (gross) are factored with Salem Credit Corp,
without guarantee at a financing charge of 7%. Cash is received for the proceeds;
collections are handled by the finance company (These accounts were past the discount
period).
b. Specific account receivable of OMR 12,000 (gross) are pledged to Salem Credit Corp,
as a security of a loan of OMR 8,000 at a finance charge of 5% of the amount of loan.
The finance company will make the collection (These accounts were past the discount
period).
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