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19 January, 05:17

Hunt Incorporated sold $209,000 of accounts receivable to Gannon Factors Inc. on a with recourse basis. Gannon assesses a 2% finance charge of the amount of accounts receivable and retains an amount equal to 7% of accounts receivable for possible adjustments. Prepare the journal entries for Hunt Incorporated and Gannon Factors to record the sale of the accounts receivable to Gannon assuming that the recourse liability has a fair value of $12,100. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

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  1. 19 January, 05:29
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    Dr Cash $190,190

    Dr Due from Gannon Factors $14,630

    Dr Loss on Sale of Receivables $16,280

    Cr Accounts Receivable $209,000

    Cr Recourse Liability $12,100

    Dr Accounts Receivables $209,000

    Cr Due to Customer $14,630

    Cr Interest Revenue $4,180

    Cr Cash $190,190

    Explanation:

    Journal entries

    Dr Cash $190,190

    Dr Due from Gannon Factors $14,630

    Dr Loss on Sale of Receivables $16,280

    Cr Accounts Receivable $209,000

    Cr Recourse Liability $12,100

    Dr Accounts Receivables $209,000

    Cr Due to Customer $14,630

    Cr Interest Revenue $4,180

    Cr Cash $190,190

    *7% X $209,000 = $14,630

    *2% X $209,000 = $4,180+$12,100=$16,280
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