The controller for Bridgeport Corporation has reached an agreement with Sarasota Financing Ltd. to sell a large portion ofBridgeport's past-due accounts receivable. Bridgeport agrees to sell $1,830,000 of accounts receivable to Sarasota without recourse.Bridgeport's controller estimates that the fair value of uncollectible accounts is $164,000. Sarasota will charge Bridgeport 7% of thetotal receivables balance as a financing fee, and will withhold an initial amount of 8%. The transaction is treated as a sale.(a)Your answer is partially correct.Calculate the net proceeds and the gain or loss on the disposal of receivables to Sarasota Financing Ltd.Net proceedsLoss on disposal of receivables15555001391500SUPPORT

Account receivable means the amount due from customer to whom the goods has been sold on credit. Any…

Answered: The controller for Bridgeport…

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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Assume that on January 1 of the current year, with the netrealizable value of accounts receivable equal to 470,000, thecompany decided to factor 400,000 of accounts receivable toGustav Factors, Ltd. Gustav retains 6% of the amount factored as a reserve or hold back. Gustav Factors also charged Council a 4%financing fee (4% of the total factored amount). As a result, only90% of the proceeds are remitted.Instruction: Prepare the journal entry to record the factoring of400,000 of account receivable assuming that Council sold thereceivable with recourse.
On June 30, 2021, Blondie Fixtures was considering alternatives to bolster its cash position. Option One called for transferring $340,000 in accounts receivable to Dogwood Finance Company without recourse for a 6% fee. Option Two calls for Blondie to transfer the $340,000 in receivables to Dogwood with recourse. Dogwood's charges a 5% fee for receivables factored with recourse. Option Two meets the conditions to be considered a sale, but Blondie estimates a $2,400 recourse liability. Under either option, Dogwood will immediately remit 90% of the factored receivables to Blondie, and retain 10%. When Dogwood collects the remaining receivables, it remits the amount, less the fee, to Blondie. Blondie estimates that the fair value of the final 10% of the receivables is $22,000 (ignoring the factoring fee). Required:1. Prepare any necessary journal entry or entries if receivables are factored under Option One.2. Prepare any necessary journal entry or entries if receivables are factored under…
Coronado Corporation has elected to use the fair value option for one of its notes payable. The note was issued at an effective rate of 12% and has a carrying value of $13,000. At year - end, Coronado's borrowing rate (credit risk) has declined; the fair value of the note payable is now $14,600. (a) Determine the unrealized holding gain or loss on the note. (Enter loss using either a negative sign preceding the number e.g. -2,945 or parentheses e.g. (2,945).) Unrealized holding gain or loss $enter the unrealized holding gain or loss in dollars eTextbook and Media List of Accounts Attempts: 0 of 6 used (b) The parts of this question must be completed in order. This part will be available when you complete the part above.
es Mountain High Ice Cream Company reports under IFRS. Mountain High transferred $64,000 of accounts receivable to the Prudential Bank. The transfer was made with recourse. Prudential remits 80% of the factored amount to Mountain High and retains 20% 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 $5,400). Mountain High anticipates a $3,400 recourse obligation. The bank charges a 1% fee (1% of $64,000), 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…
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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
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Mountain High Ice Cream Company transferred $60,000 of accounts receivable to the Prudential Bank. The transfer was made without recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10%.When the bank collects the receivables, it will remit to Mountain High the retained amount (which Mountainestimates has a fair value of $5,000) less a 2% fee (2% of the total factored amount).Required:Prepare the journal entry to record the transfer on the books of Mountain High assuming that the sale criteria aremet.
The controller for Concord Corporation has reached an agreement with Riverbed Financing Ltd. to sell a large portion of Concord’s past-due accounts receivable. Concord agrees to sell $1,840,000 of accounts receivable to Riverbed with recourse. Concord’s controller estimates that the fair value of Concord’s liability to pay Riverbed for uncollectible accounts is $165,000. Riverbed will charge Concord 8% of the total receivables balance as a financing fee, and will withhold an initial amount of 9%.Calculate the net proceeds and the gain or loss on the disposal of receivables to Riverbed Financing Ltd. Net proceeds $ ( Loss / Gain ) on disposal of receivables $ Prepare the journal entry on the books of Concord Corporation to record the disposal of receivables to Riverbed Financing Ltd. (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 0 for the…

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