Ayayai Enterprises sold $700,000 of accounts receivable to Kingbird Factors, Inc. on a with recourse basis under ASPE, as the risks and rewards have been transferred to Kingbird. The transaction meets the criteria for a sale, and no asset or liability components of the receivables are retained by Ayayai. Kingbird Factors assesses a finance charge of 3% of the amount of accounts receivable and retains an amount equal to 4% of accounts receivable. Prepare the journal entry for Ayayai to record the sale, assuming that the recourse obligation has a fair value of $9,000. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Account Titles and Explanation Debit Credit
Ayayai Enterprises sold $700,000 of accounts receivable to Kingbird Factors, Inc. on a with recourse basis under ASPE, as the risks and rewards have been transferred to Kingbird. The transaction meets the criteria for a sale, and no asset or liability components of the receivables are retained by Ayayai. Kingbird Factors assesses a finance charge of 3% of the amount of accounts receivable and retains an amount equal to 4% of accounts receivable. Prepare the journal entry for Ayayai to record the sale, assuming that the recourse obligation has a fair value of $9,000. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Account Titles and Explanation Debit Credit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Ayayai Enterprises sold $700,000 of accounts receivable to Kingbird Factors, Inc. on a with recourse basis under ASPE, as the risks and
rewards have been transferred to Kingbird. The transaction meets the criteria for a sale, and no asset or liability components of the
receivables are retained by Ayayai. Kingbird Factors assesses a finance charge of 3% of the amount of accounts receivable and retains
an amount equal to 4% of accounts receivable.
Prepare the journal entry for Ayayai to record the sale, assuming that the recourse obligation has a fair value of $9,000. (Credit account
titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account
titles and enter O for the amounts. List all debit entries before credit entries.)
Account Titles and Explanation
Debit
T
Credit
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