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

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    Anonn
    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.

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

    Uploaded by

    Anonn
    2K views2 pages
    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.

    Original Description:

    Intermediate Accounting1

    Original Title

    8-13

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    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.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    2K views2 pages

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

    Uploaded by

    Anonn
    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.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 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

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