Question

The trial balance before adjustment for Sinatra Company shows the following balances.
The following cases are independent:
1. To obtain cash, Sinatra factors without recourse $20,000 of receivables with Stills Finance. The finance charge is 10% of the amount factored.
2. To obtain a one-year loan of $55,000, Sinatra assigns $65,000 of specific accounts receivable to Ruddin Financial. The finance charge is 8% of the loan; the cash is received.
3. The company wants to maintain the Allowance for Doubtful Accounts at 5% of gross accounts receivable.
4. The company wishes to increase the allowance account by 1½ % of sales.
Instructions
Using the data above, prepare the journal entries to record each of the above cases.


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  • CreatedSeptember 18, 2015
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