3rd Edition

ISBN: 9780136912644

Author: Elizabeth A. Gordon; Jana S. Raedy; Alexander J. Sannella

Publisher: Pearson Education (US)

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Bookkeeping is the process of recording the financial transactions of a company on a regular basis. With the process of bookkeeping, companies can track important financial information that helps management in making crucial decisions.

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Chapter 9, Problem 9.12E

Factoring Receivables with and without Recourse. Krouse Incorporated sold $1,000,000 of its accounts receivable to Fusilli Factors. Fusilli charges a fee equal to 8% of the receivables factored and holds back an additional 4% as security. Fusilli will return the hold back to Krouse when the receivables are collected. This transaction is to be recorded as a sale.

Required

a. Prepare the journal entry required to record the sale of receivables assuming that the receivables are factored without recourse

b. Independent of your answer to part (a), prepare the journal entry required to record the sale of the receivables assuming that the receivables are factored with recourse. The recourse liability is estimated at 2% of the receivables factored.

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Chapter 9, Problem 9.11E

Chapter 9, Problem 9.13E

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Chapter 9 Solutions

Intermediate Accounting

Ch. 9 - Prob. 9.1Q Ch. 9 - Do companies always classify cash as a current...Ch. 9 - Prob. 9.3Q Ch. 9 - Do accountants typically measure accounts...Ch. 9 - Under the allowance method, will the actual...Ch. 9 - How does an entity record a subsequent recovery of...Ch. 9 - Does the aging of accounts receivable method of...Ch. 9 - What is the difference between pledging accounts...Ch. 9 - How do companies account for receivables that are...Ch. 9 - Is the face value of a note receivable exchanged...

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Solution Summary: The author explains factoring without recourse, which is the process of recording the transactions of an organization in a chronological order.

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