The trial balance before adjustment for martinez company shows the following balances. dr. cr. accounts receivable $84,700 allowance for doubtful accounts 2,700 sales revenue $462,400using the data above, give the journal entries required to record each of the following cases. (each situation is independent.)1. to obtain additional cash, martinez factors without recourse $23,300 of accounts receivable with stills finance. the finance charge is 11% of the amount factored.2. to obtain a 1-year loan of $61,600, martinez assigns $70,800 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 7% of gross accounts receivable.4. based on an aging analysis, an allowance of $6,174 should be reported. assume the allowance has a credit balance of $1,041.

Explanation:

The journal entries are shown below:

1. Cash A/c Dr                    $20,737

  Financial charge A/c Dr $2,563

           To Accounts receivable       $23,300

(Being additional cash is recorded and the remaining amount is debited to the cash account)

The financial charge = Accounts receivable × financial charge percentage

= $23,300 × 11%

= 2,563

2. Cash A/c Dr                    $56,672

  Financial charge A/c Dr $4,928

           To Notes payable       $61,600

(Being additional cash is recorded and the remaining amount is debited to the cash account)

The financial charge = Accounts receivable × financial charge percentage

= $61,600 × 8%

= $4,928

3. Bad debt expense A/c Dr  $5,929

            To Allowance for doubtful debts  $5,929

(Being bad debt is recorded)

The computation of bad debt is shown below:

= Gross accounts receivable × given percentage

= $84,700 × 7%

= $5,929

4. Bad debt expense A/c Dr  $5,133

            To Allowance for doubtful debts  $5,133

(Being bad debt is recorded)

The computation of bad debt is shown below:

= Reported allowance balance - credit balance

= $6,174 - $1,041

= $5,133

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