Sheffield Corp. factors $441,000 of accounts receivable with Tamarisk Finance Co

Question

Sheffield Corp. factors $441,000 of accounts receivable with Tamarisk Finance Corporation on a without recourse basis on July 1, 2017. The receivables records are transferred to Tamarisk Finance, which will receive the collections. Tamarisk Finance assesses a finance charge of 1.80% of the amount of accounts receivable and retains an amount equal to 6% of accounts receivable to cover sales discounts, returns, and allowances. The transaction is to be recorded as a sale.

Prepare the journal entry on July 1, 2017, for Tamarisk Finance Corporation to record the purchase of receivables without recourse. (please follow the exact format for the answer and answer from the list of accounts.)

LIST OF ACCOUNTS

Accounts Payable
Accounts Receivable
Advertising Expense
Allowance for Doubtful Accounts
Bad Debt Expense
Cash
Cash Over and Short
Due from Factor
Due to Customer
Discount on Notes Payable
Discount on Notes Receivable
Freight-In
Freight-Out
Gain on Disposal of Land
Interest Expense
Interest Payable
Interest Receivable
Interest Revenue
Inventory
Land
Loss on Sale of Receivables
Miscellaneous Expenses
No Entry
Notes Payable
Notes Receivable
Office Expense
Owner's Drawings
Petty Cash
Postage Expense
Purchase Discounts
Recourse Liability
Sales Discounts
Sales Discounts Forfeited
Sales Revenue
Service Revenue
Supplies
Supplies Expenses
Unearned Sales Revenue

Explanation / Answer

1-Jul-17 Cash 406602 Due from Factor (441000*6%) 26460 Loss on sale of receivables (441000*1.8%) 7938 Accounts receivable 441000

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