Mountain High Ice Cream Company reports under IFRS. Mountain High transferred $69,000 of accounts receivable to the Prudential Bank. The transfer was made with recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10% to cover sales returns and allowances. When the bank collects the receivables, it will remit to Mountain High the retained amount (which Mountain estimates has a fair value of $5.900). Mountain High anticipates a $3,900 recourse obligation. The bank charges a 2% fee (2% of $69,000), and requires that amount to be paid at the start of the factoring arrangement. Mountain High has transferred control over the receivables, but determines that it still retains substantially all risks and rewards associated with them. Required: Prepare the journal entry to record the transfer on the books of Mountain High, considering whether the sale criteria under IFRS have been 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 < Record the transfer of accounts receivable. Note: Enter debits before credits. Event 1 Record entry General Journal Clear entry Debit Credit g View general Journal
Mountain High Ice Cream Company reports under IFRS. Mountain High transferred $69,000 of accounts receivable to the Prudential Bank. The transfer was made with recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10% to cover sales returns and allowances. When the bank collects the receivables, it will remit to Mountain High the retained amount (which Mountain estimates has a fair value of $5.900). Mountain High anticipates a $3,900 recourse obligation. The bank charges a 2% fee (2% of $69,000), and requires that amount to be paid at the start of the factoring arrangement. Mountain High has transferred control over the receivables, but determines that it still retains substantially all risks and rewards associated with them. Required: Prepare the journal entry to record the transfer on the books of Mountain High, considering whether the sale criteria under IFRS have been 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 < Record the transfer of accounts receivable. Note: Enter debits before credits. Event 1 Record entry General Journal Clear entry Debit Credit g View general Journal
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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Transcribed Image Text:Mountain High Ice Cream Company reports under IFRS. Mountain High transferred $69,000 of accounts receivable to the
Prudential Bank. The transfer was made with recourse. Prudential remits 90% of the factored amount to Mountain High and retains
10% to cover sales returns and allowances. When the bank collects the receivables, it will remit to Mountain High the retained
amount (which Mountain estimates has a fair value of $5.900). Mountain High anticipates a $3,900 recourse obligation. The bank
charges a 2% fee (2% of $69,000), and requires that amount to be paid at the start of the factoring arrangement. Mountain High
has transferred control over the receivables, but determines that it still retains substantially all risks and rewards associated with
them.
Required:
Prepare the journal entry to record the transfer on the books of Mountain High, considering whether the sale criteria under IFRS
have been 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
<
Record the transfer of accounts receivable.
Note: Enter debits before credits.
Event
1
Record entry
General Journal
Clear entry
Debit
Credit
C
View general Journal
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