The trial balance before adjustment for Sheffield Company shows the following balances.
| |
Dr. |
Cr. |
| Accounts Receivable |
$84,800 |
|
| Allowance for Doubtful Accounts |
2,420 |
|
| Sales Revenue |
|
$434,200 |
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, Sheffield factors without recourse $29,700 of accounts receivable with Stills Finance. The finance charge is 11% of the amount factored.
2. To obtain a 1-year loan of $57,600, Sheffield assigns $72,000 of specific receivable accounts to Crosby Financial. The finance charge is 8% of the loan; the cash is received and the accounts turned over to Crosby Financial.
3. The company wants to maintain the Allowance for Doubtful Accounts at 6% of gross accounts receivable.
4. Based on an aging analysis, an allowance of $5,733 should be reported. Assume the allowance has a credit balance of $1,071.