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SEK Corp. factors $400,000 of accounts receivable with Mays Finance Corporation on a without recourse basis on July 1, 2010. The receivables records are transferred to Mays Finance, which will receive the collections. Mays Finance assesses a finance charge of 1½% of the amount of accounts receivable and retains an amount equal to 4% of accounts receivable to cover sales discounts, returns, and allowances. The transaction is to be recorded as a sale. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
(a) Prepare the journal entry on July 1, 2010, for SEK Corp. to record the sale of receivables without recourse.
(b) Prepare the journal entry on July 1, 2010, for Mays Finance Corporation to record the purchase of receivables without recourse.
Short term debt has a few advantages such as the economical advantages of obtaining it at a short notice, the flexibility of being able to meet financial needs, and the possibility of renewal by extension.
Your friend, Mark, has opened a movie theater. Mark states that he does not have time to develop and implement a system of internal controls. a. Provide Mark with the objectives of a system of internal control.
What role does the Internal Revenue Service play in interpreting, and providing guidance on, the tax law? What types of tax law guidance are published by the IRS?
Examine the sources of pressure that change and influence the development of GAAP. Determine the sources of pressure that have the greatest impact. Justify your rationale.
Which of the following is not true about closing entries?
Recovery of working capital will be $10,000 at the end of its useful life. Annual cash savings from the purchase of the machine will be $20,000. a. Compute the net present value at a 12% required rate of return?
The project will generate positive cash flows of $85,000 a year at the end of each of the next five years. The project's NPV is $100,000 and the company's WACC is 10 percent. What is the project's simple, regular payback?
Explain why other costs or revenues are not included when making decisions using differential analysis.
Sophia inherited 1,000 shares of IBM. The father's cost was $2 per share at the time of purchase and 484 per share at the time of his death. Sophia sold them at $86 per share. Calculate the total amount of her capital gain.
Glen Inc. and Armstrong Co. have an exchange with no commercial substance. The asset given up by Glen Inc. has a book value of $12,000 and a fair market value of $15,000. The asset given up by Armstrong Co. has a book value of $20,000 and a fair m..
Draw an Entity-Relationships Diagram. A commercial bakery makes many different products. these products include breads, dessert, specialty cakes, and many other baked goods.
An auditor may compensate for a weakness in internal control by increasing the:
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