The trial balance before adjustment for Sinatra Company shows the following balances. The following cases are independent:
Question:
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.
Step by Step Answer:
Intermediate Accounting
ISBN: 978-0176509736
10th Canadian Edition, Volume 1
Authors: Donald Kieso, Jerry Weygandt, Terry Warfield, Nicola Young,