Response to the following problem:
AICPA Adapted Marie Company has significant amounts of trade accounts receivable as a result of credit sales to its customers. On October 2, 2010, some trade accounts receivable were assigned to Daniel Finance Company on a with-recourse, nonnotification basis for an advance of 75% of their amount at an interest charge of 20% on the balance outstanding
On November 3, 2010, other trade accounts receivable were factored on a without-recourse basis. The factor withheld 5% of the trade accounts receivable factored as protection against sales returns and allowances and charged a finance charge of 3%.
Required
1. How should Marie account for subsequent collections on the trade accounts receivable assigned on October 2, 2010, and the payments to Daniel Finance? Why?
2. How should Marie account for the trade accounts receivable factored on November 3, 2010? Why?