Krandel Incorporated sold $1, 100,000 of its accounts receivable to Filmore Factors. Filmore charges a fee equal to 10% of the receivables factored and holds back an additional 3% as security.
Filmore will return the hold back to Krandel when the receivables are collected. This transaction is to be recorded as a sale.
Requirements Prepare the journal entry required to record the sale of receivables assuming that the receivables are factored without recourse.
Independent of your answer to part (a), prepare the journal entry required to record the sale of the receivables assuming that the receivables are factored with recourse.
The recourse liability is estimated at 2% of the receivables factored.
Requirement Prepare the journal entry required to record the sale of receivables assuming that the receivables are factored without recourse.
(Record debits first, then credits. Exclude explanations from any journal entries.)