Brief Exercise 7-11 Martinez Incorporated factored $158,900 of accounts receivab

Q: Brief Exercise 7-11 Martinez Incorporated factored $158,900 of accounts receivab

Account Titles Debit Credit Cash (158900 * 92%) 146188 Due from Factor (158900 * 5%) 7945 Loss on Sale of Receivables 12527 Accounts Receivable 158900 Recourse Liability 7760 Account Titles Debit Credit Cash (158900 * 92%) 146188 Due from Factor (158900 * 5%) 7945 Loss on Sale of Receivables 12527 Accounts Receivable 158900 Recourse Liability 7760

ID: 2330370 • Letter: B

Question

Brief Exercise 7-11 Martinez Incorporated factored $158,900 of accounts receivable with Engram Factors Inc. on a with recourse basis. Engram assesses a 3% finance charge of the amount of accounts receivable and retains an amount equal to 5% of accounts receivable for possible adjustments. Prepare the journal entry for Martinez to record the sale, assuming that the recourse liability has a fair value of $7,760. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit SHOW LIST OF ACCOUNTS LINK TO TEXT

Explanation / Answer

Account Titles

Debit

Credit

Cash (158900 * 92%)

146188

Due from Factor (158900 * 5%)

7945

Loss on Sale of Receivables

12527

Accounts Receivable

158900

Recourse Liability

7760