Arness Woodcrafters sells $231,700 of receivables to Commercial Factors, Inc. on a with recourse basis. Commercial assesses a finance charge of 5% and retains an amount equal to 4% of accounts receivable. Arness estimates the fair value of the recourse liability to be $8,150.
Prepare the journal entry for Arness to record the sale.(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.)
Your accounts receivable clerk, Mitra Adams, to whom you pay a salary of $2,805 per month, has just purchased a new Acura. You decided to test the accuracy of the accounts receivable balance of $218,790 as shown in the ledger.
The following information is available for your first year in business.
| (1) |
Collections from customers |
$370,260 |
| (2) |
Merchandise purchased |
598,400 |
| (3) |
Ending merchandise inventory |
130,900 |
| (4) |
Goods are marked to sell at 40% above cost |
Compute an estimate of the ending balance of accounts receivable from customers that should appear in the ledger and any apparent shortages. Assume that all sales are made on account.