Exercise 7-23 (Algo) Factoring of accounts receivable without recourse [LO7-8] Mountain High Ice Cream Company transferred $68,000 of accounts receivable to the Prudential Bank. The transfer was made without recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10%. When the bank collects the receivables, it will remit to Mountain High the retained amount (which Mountain estimates has a fair value of $5,800) less a 2% fee (2% of the total factored amount). Required: Prepare the journal entry to record the transfer on the books of Mountain High assuming that the sale criteria are met. (If no entry is required for a transaction/event, select "No journal entry required" In the first account field.)
Exercise 7-23 (Algo) Factoring of accounts receivable without recourse [LO7-8] Mountain High Ice Cream Company transferred $68,000 of accounts receivable to the Prudential Bank. The transfer was made without recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10%. When the bank collects the receivables, it will remit to Mountain High the retained amount (which Mountain estimates has a fair value of $5,800) less a 2% fee (2% of the total factored amount). Required: Prepare the journal entry to record the transfer on the books of Mountain High assuming that the sale criteria are met. (If no entry is required for a transaction/event, select "No journal entry required" In the first account field.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Exercise 7-23 (Algo) Factoring of accounts receivable without recourse [LO7-8]
Mountain High Ice Cream Company transferred $68,000 of accounts receivable to the Prudential Bank. The transfer was made without
recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10%. When the bank collects the receivables, it
will remit to Mountain High the retained amount (which Mountain estimates has a fair value of $5,800) less a 2% fee (2% of the total
factored amount).
Required:
Prepare the journal entry to record the transfer on the books of Mountain High assuming that the sale criteria are met. (If no entry is
required for a transaction/event, select "No journal entry required" in the first account field.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F50ca585f-a1a0-4880-811c-1999994058f9%2F4fdad5e5-3321-4e78-8c85-e7f08346b0a7%2Fnvno5rm_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 7-23 (Algo) Factoring of accounts receivable without recourse [LO7-8]
Mountain High Ice Cream Company transferred $68,000 of accounts receivable to the Prudential Bank. The transfer was made without
recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10%. When the bank collects the receivables, it
will remit to Mountain High the retained amount (which Mountain estimates has a fair value of $5,800) less a 2% fee (2% of the total
factored amount).
Required:
Prepare the journal entry to record the transfer on the books of Mountain High assuming that the sale criteria are met. (If no entry is
required for a transaction/event, select "No journal entry required" in the first account field.)
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