hsl The controller for Flounder Corporation has reached an agreement with Novak Financing Ltd. to sell a large portion of Flounder'spast-due accounts receivable. Flounder agrees to sell $1,870,000 of accounts receivable to Novak with recourse. Flounder's controllerestimates that the fair value of Flounder's liability to pay Novak for uncollectible accounts is $168,000. Novak will charge Flounder 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 Novak Financing Ltd.Net proceedsLosson disposal of receivables$1552100317900Prepare the journal entry on the books of Flounder Corporation to record the disposal of receivables to Novak Financing Ltd. (Creditaccount titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for theaccount titles and enter O for the amounts.)Account Titles and ExplanationDebitCreditCashDue from Factor1551800168300Loss on Disposal of Receivables317900Accounts ReceivableRecourse Liability1870000168000

Approach to solving the question: Net Proceeds = 1,870,000 - 149,600 - 168,300 - 168,000=…

Answered: The controller for Flounder Corporation…

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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