The CDE Company is experiencing a temporary cash shortage and has decided to factor in a...

 

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The CDE Company is experiencing a temporary cash shortage and has decided to factor in a group of its accounts receivable. The factor accepts $70,000 of the receivables, remits 80% of the accounts receivable factored, and charges a 15% commission on the gross amount of the factored receivables. During the period, sales returns and allowances on factored accounts amounted to $2,500. Required: 1. Prepare journal entries on White's books to record the preceding transactions. 2. How would this assignment agreement be reported on White's December 31, 2007, balance sheet (assumed the note payable is short-term). The CDE Company is experiencing a temporary cash shortage and has decided to factor in a group of its accounts receivable. The factor accepts $70,000 of the receivables, remits 80% of the accounts receivable factored, and charges a 15% commission on the gross amount of the factored receivables. During the period, sales returns and allowances on factored accounts amounted to $2,500. Required: 1. Prepare journal entries on White's books to record the preceding transactions. 2. How would this assignment agreement be reported on White's December 31, 2007, balance sheet (assumed the note payable is short-term).

Answer rating: 100% (QA)

1 The factor accepts 70000 of the receivables and remits 80 of the accounts receivable factored This ... View the full answer