Business
Engineering
Math
Science
Social Science
Intermediate Accounting: Reporting...
Solutions
Intermediate Accounting: Reporting...
On December 1, Newton Enterprises sells $100,000 of accounts receivable to a factor without recourse, receives 85% of the value of the factored accounts, and is charged a 10% commission on the gross amount of the factored accounts receivable. Newton normally factors its accounts receivable. Prepare Newton’s journal entry.
Prepare journal entry to record the given transaction.
Accounts receivable:
Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.
Prepare journal entry to record the given transaction.
| Date | Account Title and Explanation | Debit | Credit |
| Â | Cash (2) | 75,000 | Â |
| Â | Factory expense (1) | 15,000 | Â |
| Â | Receivables from factor(3) | 10,000 | Â |
| Â | Â Â Â Â Accounts receivable | Â | 100,000 |
|  | ( To record sale of receivables to the factor) |  |  |
Table (2)
- Cash is an asset and there is an increase in the value of an asset. Hence, debit the cash by $75,000.
- Factory expense is a component of stockholder’s equity and there is an increase in the value of expense. Hence, debit the factory expense by $15,000.
- Receivables from factor are an asset and there is an increase in the value of asset. Hence, debit the receivables from factor by $10,000.
- Accounts receivable is an asset and there is a decrease in the value of asset. Hence, credit the accounts receivable by $100,000.
Working notes:
(1) Calculate the factory expense.
(2) Calculate the cash to be received during the year 2019
Chapter 6 Solutions
Additional Business Solutions
Find more solutions based on key concepts
Show solutions addAssume that when a purchase of supplies of 2,650 for cash was recorded, both the debit and the credit were jour...
Financial Accounting
Analyze and compare Foot Locker and The Finish Line The Foot Locker, Inc. (FL) and The Finish Line, Inc. (FINL)...
Corporate Financial Accounting
Customer return and refund On December 28, Silverman Enterprises sold 18,500 of merchandise to Beasley Co. with...
Financial & Managerial Accounting
MANAGING YOUR WRITING The investments committee of your church has come to you for advice. One of the stocks he...
College Accounting, Chapters 1-27
Entries for uncollectible accounts, using direct write-off method Journalize the following transactions in the ...
Financial And Managerial Accounting
What is the internal auditors primary role in the conceptual design of the system?
Accounting Information Systems
Explain why the variable overhead spending variance is not a pure price variance.
Managerial Accounting: The Cornerstone of Business Decision-Making
What is inflation and what causes it?
Essentials of Economics (MindTap Course List)
Explain when marketing research should be conducted
MKTG 12:STUDENT ED.-TEXT
What are the two classifications of sales promotion methods?
Foundations of Business (MindTap Course List)
Fortune magazine regularly publishes a list of the most respected companies. According to the efficient markets...
Brief Principles of Macroeconomics (MindTap Course List)
Identify the eight functions of marketing physical goods.
Contemporary Marketing
Why do some organizations seem to have a new CEO every year or two, whereas others have top leaders who stay wi...
Management, Loose-Leaf Version
(Demand Shifters) List five things that are held constant along a market demand curve, and identify the change ...
ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
The Commerce Department reported receiving the following applications for the Malcolm Baldrige National Quality...
STATISTICS F/BUSINESS+ECONOMICS-TEXT
CAPM AND REQUIRED RETURN Beale Manufacturing Company has a beta of 1.1, and Foley Industries has a beta of 0.30...
Fundamentals of Financial Management, Concise Edition (MindTap Course List)
How are the applications approach and the centralized database approach to business event processing similar? H...
Accounting Information Systems
Communication Technology Social Media Web. YOUR TASK. On Twitter, in the Search window on top of the page, ente...
Essentials of Business Communication (MindTap Course List)
If the tax rate is 40 percent, compute the before-tax real interest rate and the after-tax real interest rate i...
Principles of Macroeconomics (MindTap Course List)
In what ways is economics a science?
Principles of Microeconomics (MindTap Course List)
ADJUSTING COST OF CAPITAL FOR RISK Ziege Systems is considering the following independent projects for the comi...
Fundamentals of Financial Management (MindTap Course List)
Advocates for setting monetary policy by rule rather than discretion often argue that a. central bankers with d...
Principles of Economics (MindTap Course List)
Tuttle Construction Co. specializes in building replicas of historic houses. Tim Newman, president of Tuttle Co...
Financial Accounting
Ethics and professional conduct in business Marvin Turner was discussing summer employment with Tina Song, pres...
Financial & Managerial Accounting
The following transactions were completed by Nelsons Hardware, a retailer, during September. Terms on sales on ...
College Accounting (Book Only): A Career Approach
Fair value journal entries, trading investments The investments of Charger Inc. include a single investment: 14...
Accounting (Text Only)
Why would large-scale government redistribution tend to reduce hours worked, savings and investment, and human ...
Exploring Economics
FINDING THE REQUIRED INTEREST RATE Your parents will retire in 18 years. They currently have 250,000 saved, and...
Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)
A survey of 131 investment managers in Barrons Big Money poll revealed the following: 43% of managers classifie...
Statistics for Business & Economics, Revised (MindTap Course List)
Define and provide examples of the three types of business activities.
College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
On March 1 of this year, B. Gervais established Gervais Catering Service. The account headings are presented be...
College Accounting (Book Only): A Career Approach
What is a cash budget, and how can this statement be used to help reduce the amount of cash that firm needs to ...
Fundamentals of Financial Management (MindTap Course List)
Suppose the economy is in a long-run equilibrium. a. Draw a diagram to illustrate the state of the economy. Be ...
Principles of Macroeconomics (MindTap Course List)
Describe the six steps in the order-to-cash process.
Pkg Acc Infor Systems MS VISIO CD
Tiffany Moulder, married and claiming three allowances, receives a salary of 1,100.25 each week. Compute the am...
PAYROLL ACCT.,2019 ED.(LL)-TEXT
Multiple-step income statement and report form of balance sheet The following selected accounts and their curre...
Survey of Accounting (Accounting I)
Hutch Co. sold merchandise to Bibbins Company on May 31, FOB shipping point. If the merchandise is in transit o...
Corporate Financial Accounting
Suppose you arrive at a verbal agreement with someone on the price of purchasing his or her vehicle. Under what...
Purchasing and Supply Chain Management
In what form does a bank hold its required reserves? Assume the Fed has a 20 percent required reserve ratio. Wh...
Economics For Today
Why might special-interest groups favor transfer-promoting policies over growth-promoting policies?
Macroeconomics
Carson Wellington, president of Mallory Plastics, was considering a report sent to him by Emily Sorensen, vice ...
Cornerstones of Cost Management (Cornerstones Series)
Suppose the combination of more accurate data and better forecasting techniques would make it easy for the Fed ...
Economics (MindTap Course List)
