Reference no: EM132944356

The trial balance before adjustment for Whispering Company shows the following balances.

                                                                 Dr.                Cr.

Accounts Receivable                     $86,400

Allowance for Doubtful Accounts       2,450

Sales Revenue                                                      $462,200

Problem 1: Using the data above, give the journal entries required to record each of the following cases. (Each situation is independent.)

1. To obtain additional cash, Whispering factors without recourse $22,300 of accounts receivable with Stills Finance. The finance charge is 12% of the amount factored.

2. To obtain a 1-year loan of $60,800, Whispering pledges $71,300 of specific receivable accounts to Crosby Financial. The finance charge is 8% of the loan; the cash is received and the accounts turned over to Crosby Financial.

3. The company wants to maintain the Allowance for Doubtful Accounts at 6% of gross accounts receivable.

4. Based on an aging analysis, an allowance of $5,749 should be reported. Assume the allowance has a credit balance of $1,149.