Question - Journalizing Various Receivable Transactions
The trial balance before adjustment for Sinatra Company shows the following balances.
Dr. Cr.
Accounts Receivable $84,400
Allowance for Doubtful Accounts 2,310
Sales $463,300
Using the data above, give the journal entries required to record each of the following cases. (Each situation is independent.)
To obtain additional cash, Sinatra factors without recourse $25,200 of accounts receivable with Stills Finance. The finance charge is 10% of the amount factored.
To obtain a one-year loan of $56,600, Sinatra assigns $69,000 of specific receivable accounts to Ruddin Financial. The finance charge is 8% of the loan; the cash is received and the accounts turned over to Ruddin Financial.
The company wants to maintain the Allowance for Doubtful Accounts at 5% of gross accounts receivable.
The company wishes to increase the allowance by 1½% of net sales.