Exercise 7-18 Windsor Corporation factors $254,500 of accounts receivable with K

Q: Exercise 7-18 Windsor Corporation factors $254,500 of accounts receivable with K

Journal entry : Account title and explanation Debit Credit cash $239,230 loss on sale (254,500*25+3060) $8,150 Due from fact($254,500*4%) $10,180 Recourse liability $3,060 Account receivable $254,500 Account title and explanation Debit Credit cash $239,230 loss on sale (254,500*25+3060) $8,150 Due from fact($254,500*4%) $10,180 Recourse liability $3,060 Account receivable $254,500

ID: 2585303 • Letter: E

Question

Exercise 7-18 Windsor Corporation factors $254,500 of accounts receivable with Kathleen Battle Financing, Inc. on a with recourse basis. Kathleen Battle Financing will collect the receivables. The receivables records are transferred to Kathleen Battle Financing on August 15, 2017. Kathleen Battle Financing assesses a finance charge of 2% of the amount of accounts receivable and also reserves an amount equal to 4% of accounts receivable to cover probable adjustments (b) Assume that the conditions are met for the transfer of receivables with recourse to be accounted for as a sale. Prepare the journal entry on August 15, 2017, for Windsor to record the sale of receivables, assuming the recourse liability has a fair value of $3,060. (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.) Date Account Titles and Explanation Debit Credit Aug. 15, 2017 Click if you would like to Show Work for this question: Open Show Work

Explanation / Answer

Journal entry :

Account title and explanation

Debit

Credit

cash

$239,230

loss on sale (254,500*25+3060)

$8,150

Due from fact($254,500*4%)

$10,180

Recourse liability

$3,060

Account receivable

$254,500