Exercise 7-24 (Algo) Factoring of accounts receivable without recourse [LO7-8] Mountain High Ice Cream Company transferred $62,000 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 $5,200) 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. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list Journal entry worksheet 1 Record the transfer of accounts receivable. Note: Enter debits before credits.
Exercise 7-24 (Algo) Factoring of accounts receivable without recourse [LO7-8] Mountain High Ice Cream Company transferred $62,000 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 $5,200) 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. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list Journal entry worksheet 1 Record the transfer of accounts receivable. Note: Enter debits before credits.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Exercise 7-24 (Algo) Factoring of accounts receivable without recourse [LO7-8]
Mountain High Ice Cream Company transferred $62,000 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 $5,200) 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.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
View transaction list
Journal entry worksheet
1
Record the transfer of accounts receivable.
Note: Enter debits before credits.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff7866285-aa31-4b97-bd88-8e8434bf5758%2F53e8dbb3-849a-46da-954c-0b32c8983bae%2Fj3i8awl_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 7-24 (Algo) Factoring of accounts receivable without recourse [LO7-8]
Mountain High Ice Cream Company transferred $62,000 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 $5,200) 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.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
View transaction list
Journal entry worksheet
1
Record the transfer of accounts receivable.
Note: Enter debits before credits.
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