Marin Corp. factors $441,000 of accounts receivable with Headland Finance Corporation on a without recourse basis on July 1, 2020. The receivables records are transferred to Headland Finance, which will receive the collections. Headland Finance assesses a finance charge of 1.80% of the amount of accounts receivable and retains an amount equal to 6% of accounts receivable to cover sales discounts, returns, and allowances. The transaction is to be recorded as a sale. Required:
Prepare the journal entry on July 1, 2020, for Marin Corp. to record the sale of receivables without recourse.

Debit Cash for $406,602; Debit Finance charge for $7,938; Debit Loss on sale of receivables for 26,460; and Credit Accounts receivable for $441,000.

Explanation:

Before preparing the journal entry, the following calculations are made firs:

Finance charge = Percentage of finance charge * Accounts receivable = 1.80% * $441,000 = $7,938

Loss on sale of receivables = Percentage retained * Accounts receivable = 6% * $441,000 = $26,460

Cash = Accounts receivable - Finance charge - Loss on sale of receivables = $441,000 - $7,938 - $26,460 = $406,602

The journal entry will now look as follows:

Date            Details                                         Debit ($)           Credit ($)    

01 Jul '20    Cash                                             406,602

                    Finance charge                                7,938

                    Loss on sale of receivables         26,460

                       Accounts receivable                                        441,000

                  (To record factoring of accounts receivable.)                        

answer; charters;

answer///the factor market;