The trial balance before adjustment for Wildhorse Company shows the following balances. Accounts Receivable Allowance for Doubtful Accounts Sales Revenue 1. Dr. 2 $85,600 2,940 Cr. Using the data above, give the journal entries required to record each of the following cases. (Each situation is independent.) $475,600 To obtain additional cash, Wildhorse factors without recourse $24,300 of accounts receivable with Stills Finance. The finance charge is 10% of the amount factored. To obtain a 1-year loan of $58,900, Wildhorse pledges $67,000 of specific receivable accounts to Crosby Financial. The
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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.
![The trial balance before adjustment for Wildhorse Company shows the following balances.
Accounts Receivable
Allowance for Doubtful Accounts
Sales Revenue
1.
2
3.
Dr.
4.
$85,600
Using the data above, give the journal entries required to record each of the following cases. (Each situation is independent.)
2,940
Cr.
$475,600
To obtain additional cash, Wildhorse factors without recourse $24,300 of accounts receivable with Stills Finance. The finance
charge is 10% of the amount factored.
To obtain a 1-year loan of $58,900, Wildhorse pledges $67,000 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.
The company wants to maintain the Allowance for Doubtful Accounts at 5% of gross accounts receivable.
Based on an aging analysis, an allowance of $5,577 should be reported. Assume the allowance has a credit balance of $1,181.
(If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented
when the amount is entered. Do not indent manually.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe21f71c5-7537-4114-80f9-630e42407411%2Fb82144ff-5e61-489c-b65c-09d9a580d39d%2F94iil7_processed.jpeg&w=3840&q=75)
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