Scribd
Upload
3K views2 pages

Computation:: Freeway Company Requirement1: Books of Motorway Company Debit Credit

Freeway Company factored $3 million of accounts receivable, receiving $2.25 million in cash initially and retaining $300,000 as a holdback. They incurred $450,000 in commission fees and $350,000 loss on the factoring. Later, they received $250,000 from the factor upon further collection of the receivables.

Uploaded by

Anonn
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
3K views2 pages

Computation:: Freeway Company Requirement1: Books of Motorway Company Debit Credit

Freeway Company factored $3 million of accounts receivable, receiving $2.25 million in cash initially and retaining $300,000 as a holdback. They incurred $450,000 in commission fees and $350,000 loss on the factoring. Later, they received $250,000 from the factor upon further collection of the receivables.

Uploaded by

Anonn
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
You are on page 1/ 2

Freeway Company

Requirement1: Books of Motorway Company Debit Credit

1 Cash 2,250,000
Rceivable from factor 300,000
Allowance for doubtful accounts 100,000
Loss on factoring 350,000
Accounts receivable 3,000,000

Computation:

Gross amount 3,000,000


Holdback (10%*3,000,000) -300,000
Commission (15%*3,000,000) -450,000
Cash received 2,250,000

Sales price 2,550,000


Carrying amount of accounts receivable (3,000,000-100,000) 2,900,000
Loss on factoring 350,000

2 Cash 250,000
Receivable from factor 250,000

Computation:

Accounts receivable factored 3,000,000


Collection by factor 2,500,000
Balance - Dec 31 500,000

Receivable from factor per book 300,000


Required holdback (10%*500,000) 50,000
Remittance from factor 250,000
Requirement2: Books of Freeway Company Debit Credit

1 Accounts receivable 3,000,000


Cash 2,250,000
Clients retainer 300,000
Commision income 450,000

2 Cash 2,500,000
Accounts receivable 2,500,000

Clients retainer 250,000


Cash 250,000

Doubtful accounts 20,000


Allowance for doubtful accounts (4%*500,000) 20,000

You might also like