Journal entry

Show all computations thoroughly and legibly to receive credit! Problem #1 Solve the following two unrelated short problems:

Part a

Aaron Company factors $2,000,000 of its accounts receivables with recourse for a finance charge of 3%. The finance company retains an amount equal to 10% of the accounts receivable for possible adjustments. Aaron estimates the fair value of the recourse liability at $100,000. Required Prepare the journal entry to record this transaction.

Part b

Presented below is information from Pelletier Incorporated: July 1 Sold $20,000 worth of widgets to Rogers Company with terms 2/10, n/30. July 10 Received payment from Rogers for ½ of the July 1 invoice. July 27 Received payment from Rogers for the other ½ of the July 1 invoice. Required Prepare the necessary journal entries to record these transactions assuming: 1. Pelletier uses the gross method. 2. Pelletier uses the net method.

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