Brief Exercise 7-10 Wood Incorporated factored $148,800 of accounts receivable w
ID: 2458754 • Letter: B
Question
Brief Exercise 7-10
Wood Incorporated factored $148,800 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 6% of accounts receivable for possible adjustments.
Prepare the journal entry for Wood to record the sale, assuming that the recourse liability has a fair value of $6,680. (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
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Answer:
Wood Incorporated
Cash...........................................................................Dr $ 142,088
Due from factor............................................................Dr. $ 8,928
Loss on sale of Receivable...........................................Dr. $ 4,464
Account Receivable..............................................................$ 148,800
Resourse Liability.................................................................$ 6,680
Engram Factors
Account Receivable.............................................................Dr. $ 148,800
Resourse Liability................................................................Dr.$ 6,680
Cash........................................................................... $ 142,088
Due from factor............................................................. $ 8,928
Loss on sale of Receivable............................................ $ 4,464
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