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[answered] Martinez Company finances some of its current operations by
Martinez Company finances some of its current operations by assigning accounts receivable to a finance company. On July 1, 2017, it assigned, under guarantee, specific accounts amounting to $210,000. The finance company advanced to Martinez?80% of the accounts assigned (20% of the total to be withheld until the finance company has made its full recovery), less a finance charge of?0.50% of the total accounts assigned.
On July 31, Martinez Company received a statement that the finance company had collected $112,000?of these accounts and had made an additional charge of?0.50% of the total accounts outstanding as of July 31. This charge is to be deducted at the time of the first remittance due Martinez Company from the finance company. (Hint:Make entries at this time.) On August 31, 2017, Martinez Company received a second statement from the finance company, together with a check for the amount due. The statement indicated that the finance company had collected an additional $70,000?and had made a further charge of?0.50% of the balance outstanding as of August 31.
Make all entries on the books of Martinez Company that are involved in the transactions above.
1st Jul Account Receivable Assigned
To Account Receivable Dr. Bank A/c
Financing Fee
To Account Receivable Assigned Dr.
Dr. Financing Fee
To Bank A/c Dr. 31st Aug Financing Fee
To Bank A/c Dr. 31st...
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This question was answered on: Sep 18, 2020
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DATE ANSWEREDSep 18, 2020
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