Gossamer Furnishings Extends Generous Payment Terms to Its Customers

question 13

Essay

Gossamer Furnishings extends generous payment terms to its customers. As a result, it has accumulated a substantial portfolio of accounts receivable. To improve cash flow, the company decided to sell $600,000 of these receivables to a factor. The company had previously checked the creditworthiness of its customers, so it is confident that few accounts will become uncollectible. Therefore, Gossamer chose to factor these receivables with recourse. In exchange for these receivables, the factor paid Gossamer 93¢ on each dollar of receivables on the date of transfer. The factor also held 2¢ on each dollar for potential uncollectible accounts. Ultimately, the factor collected $593,800 from these receivables.
Record the entries on Gossamer's books relating to the $600,000 factoring of accounts receivable.

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Definitions:

Behavioral Interview

A method of interviewing that assesses candidates' past actions and behavior patterns to predict their future performance.

Traditional Interview

A conventional method of job selection involving face-to-face conversation between the interviewer and the candidate, focusing on assessing the candidate's suitability.

Email Interviews

A method of conducting interviews where questions are sent via email, and the respondent replies at their convenience.

IM Interviews

Interviews conducted through instant messaging platforms, offering a text-based alternative to traditional or video interviews.