The trial balance before adjustment for Kelly Company shows the following balances. Instructions Using the data above,
Question:
Instructions
Using the data above, give the journal entries required to record each of the following cases. (Each situation is independent.)
1. To obtain additional cash, Kelly factors without recourse $50,000 of accounts receivable with Easy Finance. The finance charge is 8% of the amount factored.
2. To obtain a one-year loan of $20,000, Kelly assigns $40,000 of specific receivable accounts to B&C Financial. The finance charge is 6% of the loan; the cash is received and the accounts turned over to B&C Financial.
3. The company wants to maintain the Allowance for Doubtful Accounts at 4% of gross accounts receivable.
4. The company wishes to increase the allowance account by 2% of netsales.
Step by Step Answer:
Intermediate Accounting
ISBN: 978-1118147290
15th edition
Authors: Donald E. Kieso, Jerry J. Weygandt, and Terry D. Warfield