Question

Exercise 7-21 Presented below is information for Ayayai Company 1. Beginning-of-the-year Accounts Receivable balance was $19,800 2. Net sales (all on account) for the year were $109,400. Ayayai does not offer cash discounts. 3. Collections on accounts receivable during the year were $88,300 Ayayai is planning to factor some accounts receivable at the end of the year. Accounts totaling $14,100 will be transferred to Credit Factors, Inc. with recourse. Credit Factors will retain 6% of the balances for probable adjustments and assesses a finance charge of 5%. The fair value of the recourse obligation is $1,030 Your answer is partially correct. Try again. Prepare the journal entry to record the sale of the receivables. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually) Account Titles and Explanation Debit Credit Cash Due from Factor Loss on Sale of Recelvables Accounts Receivable Recourse Llability Your answer is incorrect. Try again. Compute Ayayai's accounts receivable turnover for the year, assuming the receivables are so (Round answers to 2 decima/paces, e 9-4 . Accounts receivable turnover times Days to collect accounts receivable days

Answer 1

Accounts receivable sold with recourse $19,800 1 Accounts receivable, be 2 Credit sales 3 Cash collected from receivables 4 Accounts receivable, ending $109,400 $88,300 S40,9 Account Titles and Explanation Debit Credit 7 Cash 8 Due from factor 9 Loss on sale of receivables 10 Accounts receivable 11 Recourse 12 (To record sale of receivables on recourse basis 13 14 Accounts receivable beginning balance 15 Accounts receivable ending balance after se 16 Average accounts receivables $12,549 $846 $1,735 $14,100 $1,030 $19,800 S26,800 S23,300 Accounts receivable turnover 17 (Credit sales/Average accounts receivable) 4.70 times Davs to collect accounts receivable 18 (365 davs/Accounts receivable turnover 77.74 days Calculations are shown below: 1 Accounts receivable, be 2 Credit sales 3 Cash collected from receivables 4 Accounts receivable, endin 19800 109400 88300 B1+B2-B3 Account Titles and Explanation Debit Credit C11+C10-B9-B8 C10 6% (C10*5%)-C11 7 Cash 8 Due from factor 9 Loss on sale of receivables 10 Accounts receivable 11Recourse 12 To record sale of receivables on recourse basis 13 14 Accounts receivable 15 Accounts receivable ending balance after se 16 Average accounts receivables 14100 1030 B1 B4-C10 B14+B15)/2 balance Accounts receivable turnover 17 (Credit sales/Average accounts receivable) B2/B16 times Days to collect accounts receivable 18 (365 days/Accounts receivable turnover 365/B17