Manufactured Homes Essay

755 Words Feb 9th, 2016 4 Pages
Financial Statement Analysis

Dan (), WG02

1. Manufactured Homes, Inc. focuses on the retail sale of fully furnished and carpeted new and old mobile homes for individuals in the low income category. Manufactured Homes, Inc.’s customers are those seeking a single-family primary residence but not having the ability to purchase housing due to high costs. These customers, typically blue-collar workers in manufacturing, service, and agricultural industries, make a median of $20,000 per year. Manufactured Homes, Inc. then typically sells their single sectional homes for $10,000-$25,000 with the median being $17,000. Hence, the affordability. They also
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2. In the beginning of the document, it is explained that Manufactured Homes, Inc. sales are credit sales where the customer gives an initial down payment of 5-10% of the sales price and enters him/herself into an installment contract ranging from 84-180 months.
The journal entries are as follows:
Debit Accounts Receivable
Debit Cash
Credit Net Sales?
Credit Inventories?
A sale is recognized when a payment is received (down payment) and then it entered into an installment contract.

3. It is explained that Manufactured Homes, Inc. accounts for the transfer of its accounts receivable to financial institutions on a recourse basis. These transfers of receivables that are subject to recourse must be reported as sales if the following is met: c. The seller clearly surrenders the receivable to the buyer d. The sellers remaining obligations to the buyer under the recourse provision must be subject to reasonable estimation on the date of the transfer of the receivable. The seller must then be able to estimate: i. The amount of bad debts and related costs to the repossession ii. The amount of prepayments
*if the seller cannot make these estimates, then the transfer cannot be reported as a sale. e. The seller cannot be required to repurchase the receivables from the buyer except in accordance with the recourse

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