Mountain High Ice Cream Company transferred $79,000 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 $6,900). Mountain High anticipates a $4,900 recourse obligation. The bank charges a 3% fee (3% of $79,000), and requires that amount to be paid at the start of the factoring arrangement. 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. Event 1 General Journal Debit Credit >
Mountain High Ice Cream Company transferred $79,000 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 $6,900). Mountain High anticipates a $4,900 recourse obligation. The bank charges a 3% fee (3% of $79,000), and requires that amount to be paid at the start of the factoring arrangement. 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. Event 1 General Journal Debit Credit >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Mountain High Ice Cream Company transferred $79,000 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
$6,900). Mountain High anticipates a $4,900 recourse obligation. The bank charges a 3% fee (3% of $79,000), and requires that
amount to be paid at the start of the factoring arrangement.
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.
Event
1
General Journal
Debit
Credit
>](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F95d32cf6-d6bb-42e8-ac37-0876b3b00e52%2F533c41b9-1e9a-4561-9de7-29f64de79b33%2Fefqlxg_processed.png&w=3840&q=75)
Transcribed Image Text:Mountain High Ice Cream Company transferred $79,000 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
$6,900). Mountain High anticipates a $4,900 recourse obligation. The bank charges a 3% fee (3% of $79,000), and requires that
amount to be paid at the start of the factoring arrangement.
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.
Event
1
General Journal
Debit
Credit
>
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