General Accounting Sun Inc. factors $3,000,000 of its accountsreceivables with recourse for a finance charge of 3%.The finance company retains an amount equal to10% of the accounts receivable for possibleadjustments. Sun estimates the fair value of therecourse liability at $150,000. What would berecorded as a gain (loss) on the transfer ofreceivables?

Step 1: Define Accounts receivableAccounts receivable is an account prepared to record debtors by…

Answered: Sun Inc. factors $3,000,000 of its…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Vaughn Manufacturing assigns $7300000 of its accounts receivables as collateral for a $2.64 million 9% loan with a bank. Vaughn Manufacturing also pays a finance fee of 2% on the transaction upfront. What would be recorded as a gain (loss) on the transfer of receivables?
If the Equity of NRWM, Inc. is $17,000,000; and the company owes $2,000,000 in unpaid payroll and owes $8,000,000 to the bank on a credit line, what is the FAIR MARKET VALUE of the assets it owns?
Maxwell Corporation factored, with recourse, $200,000 of accounts receivable with Huskie Financing. The finance charge is 3%, and 5% was retained to cover sales discounts, sales returns, and sales allowances. Maxwell estimates the recourse obligation at $4,800. What amount should Maxwell report as a loss on sale of receivables?
10. Ebasan Company factored P5,000,000 of accounts receivable. Control was surrendered by the entity. The transaction met the criteria to be accounted for as sale but subject to recourse for nonpayment. The fair value of the recourse obligation is P250,000. The finance company assessed a fee of 6% and retained a holdback equal to 10% of the accounts receivable. In addition, the finance company charged 12% Interest computed on a weighted average time to maturity of the accounts receivable for 60 days. What total amount should be recognized initially as loss on factoring? A. 398,630 B. 898,630 C. 800,000 D. 648,630 11. What amount should be reported as loss on factoring assuming the accounts are fully collected by the factor? A. 398,630 B. 300,000 C. 550,000 D. 400,000
View Policies Current Attempt in Progress Swifty Corporation factors $ 6500000 of its accounts receivables with recourse for a finance charge of 5%. The finance company retains an amount equal to 10% of the accounts receivable for possible adjustments. Swifty estimates the fair value of the recourse liability at $ 224000. What would be recorded as a gain (loss) on the transfer of receivables? O Gain of $ 325000. O Gain of $ 1199000. O Loss of $ 549000. O Loss of $ 224000. Save for Later Attempts: 0 of 1 used Submit Answer
Sheffield Corp. factors $710,000 of accounts receivable with Sage Hill Inc., Inc. on a with recourse basis. Sage Hill Inc. will collect the receivables. The receivable records are transferred to Sage Hill Inc. on August 15, 2020. Sage Hill Inc. assesses a finance charge of 2.0% of the amount of accounts receivable and also reserves an amount equal to 5.05% of accounts receivable to cover probable adjustments. Sheffield prepares financial statements under ASPE Assume the conditions for to be recorded as a sale are met. Prepare the journal entry on August 15, 2020, for Sheffield to record the sale of receivables, assuming the recourse obligation has a fair value of $5,200. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter O for the amounts) Account Titles and Explanation Credit Debit
Sakuragi Corporation engaged in the following transactions with regards to financing of receivable during 2021:· On February 1, Sakuragi company factored receivables with a face amount of P300,000 BPI. BPI assessed a factoring fee of 3% of the receivables and retains 5% of the receivables factored. The factoring was done on a without recourse basis, thus transferring all significant risks and rewards related to the receivables to BPI.· On October 1,2021, Sakuragi discounted one year 10% P40,000 interest-bearing notes receivable that will mature on December 31,2021 to Mitsui Bank without recourse. The bank’s discount rate was 15%.· Obtained a P500,000, 6 month, 15% loan from Citibank on November 1, 2021. The company pledge P600,000 of accounts receivable as security for the loan. Sakuragi received the loan less the total interest in advance and a 2% of the loaned amount as service charge.How much is the total cash received from the financing of accounts receivables?…
You sold $300,000 of accounts receivable to Friendly Factors Inc. on a with recourse basis. Friendly assesses a 2% finance charge of the amount of accounts receivable and retains an amount equal to 6% of accounts receivable for possible adjustments. You estimate that future uncollectible accounts total $15,000 1) How much cash will you receive as a result of the sale? 2) How much is the gain or loss on the sale? (indicate gain or loss) 3) The journal entry to record this sale should include which of the following? a) $18,000 DR to Due from Factor; b) $315,000 CR to accounts receivable; c) $ 15,000 DR to Recourse Obligation
On February 1, 2020, Norton Company factored receivables with a carrying amount of $300,000 to Koch Company. Koch Company assesses a finance charge of 3% of the receivables and retains 5% of the receivables to cover possible uncollectible accounts. 6.Assume that Norton factored the receivables without recourse. What amount of loss should Norton report on this transaction?a.$0. b.$9,000. c.$15,000. d.$24,000. 7.Assume that Norton factored the receivables with recourse, and the recourse obligation has an estimated fair value of $1,500. What amount of loss should Norton report on this transaction? a.The same amount as the answer to the previous question. b.$1,500 more than the answer to the previous question. c.$1,500 less than the answer to the previous question. d.Some other amount.
On February 1, 2020, Henson Company factored receivables with a carrrrying amount of $700,000 to Agee Company. Agee Company assesses a finance charge of 3% of the receivables and retains 5% of the receivables. Relative to this transaction, you are to determine the amount of loss on sale to be reported in the income statement of Henson Company for February. Assume that Herson factors the receivables on a with recourse basis. The recourse obligation has a fair value of $3,500. The loss to be reported is ?
11, please read the question carefully and follow the instructions. thanks
On January 31st, 2021, X Co. transfers $400,000 in receivables to Cater Finance with recourse. Cater charges a fee of 4% of the Account Receivable. X estimates a $3,000 recourse liability. Cater will immediately remit 90% of the factored receivables to X, and retain 10%. When Cater collects the remaining receivables, it remits the amount, less the fee, to X. X estimates that the fair value of the final 10% of the receivables is $25,000. X will record a Loss on Sale of Receivables of 34,000 9,000 25,000 40,000

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