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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The entity has an unsecured overdraft of R20000 at prospect Bank that carries an interest rate of 22% per annum. In which one of the following statement will this item be shown? A.Statement of financial position as a current liability B.Statement of financial position as a non current liability C.Statement of income and expenditure as finance costs C.Statement of financial position as current asset
Manak Corp. factors $600,000 of its accounts receivables to Dawson Factors on a recourse basis. Dawson Factors assesses a 4% finance charge on the amount of the accounts receivable and retains an amount equal to 6% of the accounts receivable for possible adjustments. What is the amount of cash Manak Corp. received from Dawson Factors at the time of the sale?
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?
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?…
DEF Company factored P6,000,000 of accounts receivable to a finance entity at the beginning of current year. Control was surrendered by DEF Company. The factor accepted the accounts receivable subject to recourse for nonpayment. The fair value of the recourse obligation is P100,000. The factor assessed a fee of 3% and retained a holdback equal to 5% of the accounts receivable. In addition, the factor charged 15% interest computed on a weighted average time to maturity of the accounts receivable of 54 days. Assuming that all accounts are collected, what is the gain or (loss) on factoring the accounts receivable?
DEF Company factored P6,000,000 of accounts receivable to a finance entity at the beginning of current year. Control was surrendered by DEF Company. The factor accepted the accounts receivable subject to recourse for nonpayment. The fair value of the recourse obligation is P100,000. The factor assessed a fee of 3% and retained a holdback equal to 5% of the accounts receivable. In addition, the factor charged 15% interest computed on a weighted average time to maturity of the accounts receivable of 54 days. Compute the amount of cash initially received from the factoring.
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 Jan. 1, 2021, Yumi Co. settled a P 1,000,000 loan payable with an unamortized discount of P 20,000 and accrued interest of P 90,000 by transferring to the lender old equipment with cost of P 3,000,000, accumulated depreciation of P 2,200,000 and fair value of P 900,000. How much gain on extinguishment of debt is to be recognized? a. P 270,000b. P 290,000c. P 250,000d. P 150,000
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.
GHI Company factored P6,000,000 of accounts receivable to a finance entity at the beginning of current year. Control was surrendered by DEF Company. The factor accepted the accounts receivable subject to recourse for nonpayment. The fair value of the recourse obligation is P100,000. The factor assessed a fee of 3% and retained a holdback equal to 5% of the accounts receivable. In addition, the factor charged 15% interest computed on a weighted average time to maturity of the accounts receivable of 54 days. Compute the amount of cash initially received from the factoring. *
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