factoring accounts receivable: on May 1 dexter in factored $2,000,000 of accounts receivable with quick...
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Accounting
factoring accounts receivable:
on May 1 dexter in factored $2,000,000 of accounts receivable with quick finances on a without recourse basis. Under the arrangement. dexter was to dispute concerning rives and quick finance was to make the collection, handle the sale discounts and absorb the credit losses. quick finances assessed a finance charge of 8% of the total accounts receivable factored and retained an amount equal to 3% of the total receivable to cover sales discounts.
Instructions:
A: Prepare the journal entry required on dexter's books on May 1.
B. Prepare the journal entry required on quick finances' books on May 1.
C. Assume Dexter factors the $2,000,000 of accounts receivable with quick finances on a with recourse basis instead. The recourse provision has a fair value of $30,000. Prepare the journal entry required on dexters book on May 1.
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