The trial balance before adjustment for Phil Collins Company shows the following balances. Dr. Cr. Accounts Receivable $82,000 Allowance for Doubtful Accounts 2,120 Sales Revenue $430,000 Instructions 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, Collins factors without recourse $25,000 of accounts receivable with Stills Finance. The finance charge is 10% of the amount factored. 2. To obtain a 1-year loan of $55,000, Collins pledges $65,000 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 5% of gross accounts receivable. 4. Based on an aging analysis, an allowance of $5,800 should be reported. Assume the allowance has a credit balance of $1,100. Can I get a bit of an explanation on how to solve for this along with the answer please. working on chapter notes to study. THANKS IN ADVANCE :)
E7.16 (LO 2, 3, 5) (Journalizing Various Receivable Transactions) The
| Dr. | Cr. | |||
| $82,000 | ||||
| Allowance for Doubtful Accounts | 2,120 | |||
| Sales Revenue | $430,000 |
Instructions
Using the data above, give the
1. To obtain additional cash, Collins factors without recourse $25,000 of accounts receivable with Stills Finance. The finance charge is 10% of the amount factored.
2. To obtain a 1-year loan of $55,000, Collins pledges $65,000 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 5% of gross accounts receivable.
4. Based on an aging analysis, an allowance of $5,800 should be reported. Assume the allowance has a credit balance of $1,100.
Can I get a bit of an explanation on how to solve for this along with the answer please. working on chapter notes to study. THANKS IN ADVANCE :)
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
