(Answered) Problem - journalizing various receivable transactionsthe

Accounting

Problem - Journalizing Various Receivable Transactions

The trial balance before adjustment for Sinatra Company shows the following balances.

Dr. Cr.

Accounts Receivable $82,000

Allowance for Doubtful Accounts 1,750

Sales $430,000

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, Sinatra factors without recourse $20,000 of accounts receivable with Stills Finance. The finance charge is 10% of the amount factored.

2. To obtain a one-year loan of $55,000, Sinatra assigns $65,000 of specific receivable accounts to Ruddin Financial. The finance charge is 8% of the loan; the cash is received and the accounts turned over to Ruddin Financial.

3. The company wants to maintain the Allowance for Doubtful Accounts at 5% of gross accounts receivable.

4. The company wishes to increase the allowance by 1½% of net sales.

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