Packwood,Inc

question 98

Essay

Packwood,Inc.sells $250,000 of its accounts receivable to M&B Finance with recourse.M&B charges a fee of 2% and withholds 8% of the face amount of the receivables to cover possible uncollectible accounts and sales returns.Packwood estimates the fair value of the recourse obligation is equal to the $13,500 allowance for uncollectibles associated with these accounts.
Required:
a.Prepare the journal entry Packwood,Inc.would make to record the factoring.
b.Prepare Packwood's journal entry to record any subsequent cash received from M&B if M&B collects all of the receivables except for $6,500 due to a sales return and $12,000 resulting from a bad debt.

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Definitions:

Anti-Poverty

Initiatives and policies aimed at reducing or eliminating poverty, focusing on economic support, education, and access to healthcare and housing.

Crime Control

Strategies, policies, and measures implemented to reduce, prevent, and manage criminal behavior and maintain social order.

Moral Panic

A widespread feeling of fear and concern among a large number of people that some evil threatens the well-being of society, often out of proportion to the actual threat.

Crime Rate

The number of reported crimes in a given area during a specified period of time, typically expressed per 100,000 population.