The trial balance before adjustment for Martinez Company shows the following balances. Dr. Cr. Accounts Receivable $84,700 Allowance for Doubtful Accounts 2,700 Sales Revenue $462,400Using the data above, give the journal entries required to record each of the following cases. (Each situation is independent.) 1. To obtain additional cash, Martinez factors without recourse $23,300 of accounts receivable with Stills Finance. The finance charge is 11% of the amount factored. 2. To obtain a 1-year loan of $61,600, Martinez assigns $70,800 of specific receivable accounts to Crosby Financial. The finance charge is 8% of the loan; the cash is received and the accounts turned over to Crosby Financial. 3. The company wants to maintain the Allowance for Doubtful Accounts at 7% of gross accounts receivable. 4. Based on an aging analysis, an allowance of $6,174 should be reported. Assume the allowance has a credit balance of $1,041.

The journal entries are shown below:

1. Cash A/c Dr $20,737

Financial charge A/c Dr $2,563

To Accounts receivable $23,300

(Being additional cash is recorded and the remaining amount is debited to the cash account)

The financial charge = Accounts receivable * financial charge percentage

= $23,300 * 11%

= 2,563

2. Cash A/c Dr $56,672

Financial charge A/c Dr $4,928

To Notes payable $61,600

(Being additional cash is recorded and the remaining amount is debited to the cash account)

The financial charge = Accounts receivable * financial charge percentage

= $61,600 * 8%

= $4,928

3. Bad debt expense A/c Dr $5,929

To Allowance for doubtful debts $5,929

(Being bad debt is recorded)

The computation of bad debt is shown below:

= Gross accounts receivable * given percentage

= $84,700 * 7%

= $5,929

4. Bad debt expense A/c Dr $5,133

To Allowance for doubtful debts $5,133

(Being bad debt is recorded)

The computation of bad debt is shown below:

= Reported allowance balance - credit balance

= $6,174 - $1,041

= $5,133