The trial balance before adjustment for Flounder Company shows the following balances. Dr. Cr.Accounts Receivable $84,500 Allowance for Doubtful Accounts 2,980 Sales Revenue $457,000Using the data above, give the journal entries required to record each of the following cases. (Each situation is independent.)1. To obtain additional cash, Flounder factors without recourse $27,700 of accounts receivable with Stills Finance. The finance charge is 12% of the amount factored.2. To obtain a 1-year loan of $55,400, Flounder pledges $66,900 of specific receivable accounts to Crosby Financial. The finance charge is 8% of the loan; the cash is received and the accounts turned over to Crosby Financial.3. The company wants to maintain the Allowance for Doubtful Accounts at 6% of gross accounts receivable.4. Based on an aging analysis, an allowance of $5,909 should be reported. Assume the allowance has a credit balance of $1,099.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms.…

Answered: The trial balance before adjustment for…

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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The trial balance before adjustment for Flounder Company shows the following balances.

	Dr.	Cr.
Accounts Receivable	$84,500
Allowance for Doubtful Accounts	2,980
Sales Revenue		$457,000

Using the data above, give the journal entries required to record each of the following cases. (Each situation is independent.)

1.		To obtain additional cash, Flounder factors without recourse $27,700 of accounts receivable with Stills Finance. The finance charge is 12% of the amount factored.
2.		To obtain a 1-year loan of $55,400, Flounder pledges $66,900 of specific receivable accounts to Crosby Financial. The finance charge is 8% of the loan; the cash is received and the accounts turned over to Crosby Financial.
3.		The company wants to maintain the Allowance for Doubtful Accounts at 6% of gross accounts receivable.
4.		Based on an aging analysis, an allowance of $5,909 should be reported. Assume the allowance has a credit balance of $1,099.

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