Problem 3 To raise more liquidity, Randy Corp. factored $70,000 of its accounts receivable with Mock Bank with recourse on 1/1/2018. Mock Bank agreed to collect the accounts receivable after the transaction, assessed a finance charge of 2% of the amount transferred and withheld an amount equal to 3% of the amount to cover probable uncollectible accounts. Randy prepared financial statements under ASPE. Assume the transaction qualified for the sale of receivables treatment. The recourse obligation had a fair value of $3,000. 1. Prepare a journal entry for Randy Corp. for the sale of receivables. 2. Prepare a journal entry for Mock Bank for the purchase of the receivables. 3. In general terms (without preparing a journal entry), describe how Randy Corp. would record the transaction if it followed IFRS.

Problem 3 To raise more liquidity, Randy Corp. factored $70,000 of its accounts receivable with Mock Bank with recourse on 1/1/2018. Mock Bank agreed to collect the accounts receivable after the transaction, assessed a finance charge of 2% of the amount transferred and withheld an amount equal to 3% of the amount to cover probable uncollectible accounts. Randy prepared financial statements under ASPE. Assume the transaction qualified for the sale of receivables treatment. The recourse obligation had a fair value of $3,000. 1. Prepare a journal entry for Randy Corp. for the sale of receivables. 2. Prepare a journal entry for Mock Bank for the purchase of the receivables. 3. In general terms (without preparing a journal entry), describe how Randy Corp. would record the transaction if it followed IFRS.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Please help me
Do not give image format
J Hotheads Unlimited sold $440,000 of accounts receivable to Frozen Factors Inc. on a with recourse basis. Frozen assesses an 11% finance charge of the amount of accounts receivable and retains an amount equal to 8% of accounts receivable to cover probable adjustments. Prepare the journal entry for Hotheads to record the sale of the accounts receivable to Frozen assuming that the recourse liability has a fair value of $26,000
Subject : Accounting
Show solutions Hope World Company factored Php600,000 of accounts receivable to Hangsang Company on July 1, 2021. Control was surrendered by Hope World. Hangsang accepted the receivables subject to recourse for nonpayment. Hagsang assessed a fee of 2% and retains a holdback equal to 5% of the accounts receivable. the fair value of the recourse obligation is Php12,000. 17. Hope World will receive and record cash of a.Php546,000 b. Php558,000 c. Php570,000 d. Php576,000 What amount of loss on factoring should Hope World company recognize? a. None b. 12,000 c. 24,000 d. 42,000
What is the total cash received from the financing of receivables and the amount of loss, respectively? (check the picture for problem and choices)
4. You are preparing the monthly bank reconciliation of Core Company for the month ending December 31, 2020. You discovered an erroneous credit to Core's account, representing proceeds of loan granted to another company amounting to P300,000. Prepare the adjusting journal entry.
11, please read the question carefully and follow the instructions. thanks
Vikarmbhai
Part 2 Now assume that on December 31, 2023, Sheridan enters into the following transactions related to the company's receivables: 1. 2. Sheridan sells the note receivable to Prairie Bank for $60,000 cash plus accrued interest. Given the creditworthiness of Sheridan's customer, the bank accepts the note without recourse and assesses a finance charge of 3.10%. Prairie Bank will collect the note directly from the customer. Sheridan factors some accounts receivable at the end of the year. Accounts totalling $35,000 are transferred to Skysong, Inc., with recourse. Skysong retains 5% of the balances and assesses a finance charge of 4% on the transfer. Skysong will collect the receivables from Sheridan's customers. The fair value of the recourse obligation is $4,700. Prepare the journal entry to record the transfer of the note receivable to Prairie Bank. (Round answers to O decimal places, e.g. 8,971. Credit account titles are automatically indented when the amount is entered. Do not indent…
Sale of Receivables Hunt Incorporated sold $300,000 of accounts receivable to Gannon Factors Inc. on a with recourse basis. Gannon assesses a 2% finance charge of the amount of accounts receivable and retains an amount equal to 6% of accounts receivable for possible adjustments. Hunt estimates a recourse liability to cover bad debts of $15,000. Subsequently, the factor collected $283,000 in cash from the accounts receivable Part B: Prepare the journal entry FOR HUNT to settle the transaction after the collection of the receivables. (hint: you may or may not need all the debits and credits) Chart of Accounts Cash Due from Factor Loss on Sale Gain on Sale Accounts receivable Allowance for bad debts Recourse liability Interest revenue
GH Traders wrote off R1 750 which represented 20% of the amount owed by a debtor. The debtor settled the balance on her account by means of an electronic funds transfer. These transactions have not yet been recorded. Which of the following statements is correct in respect of the above transactions? OA. The Debtors Control account will decrease by R7 000. OB. The debtor owed R8 750. OC. The Bank account will be credited with R7 000. OD. The amount received from the debtor was R1 400.