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Dainty Company Requirement: Prepare Journal Entries Debit Credit

Dainty Company factored $6 million of accounts receivable for $4.5 million in cash. They recorded a $900,000 commission expense and $700,000 loss on factoring. They also recorded a $600,000 holdback receivable from the factoring company that would be received later.

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0% found this document useful (0 votes)
962 views1 page

Dainty Company Requirement: Prepare Journal Entries Debit Credit

Dainty Company factored $6 million of accounts receivable for $4.5 million in cash. They recorded a $900,000 commission expense and $700,000 loss on factoring. They also recorded a $600,000 holdback receivable from the factoring company that would be received later.

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Anonn
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Dainty Company

Requirement: Prepare journal entries Debit Credit

1 Cash 4,500,000
Allowance for doubtful accounts 200,000
Receivable from factor 600,000
Loss on factoring 700,000
Accounts receivable 6,000,000

Accounts receivable factored 6,000,000


Factors holdback (10%*6,000,000) -600,000
Commission (15%*6,000,000) -900,000
Cash received 4,500,000

Accounts receivable 6,000,000


Commission -900,000
Net sales 5,100,000
Carrying amount of accounts receivable 5,800,000
Loss on factoring 700,000

2 Cash 600,000
Receivable from factor 600,000

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