The controller for Riverbed Corporation has reached an agreement with Concord Financing Ltd. to sell a large portion of Riverbed'spast-due accounts receivable. Riverbed agrees to sell $1,950,000 of accounts receivable to Concord with recourse. Riverbed'scontroller estimates that the fair value of Riverbed's liability to pay Concord for uncollectible accounts is $177,000. Concord willcharge Riverbed 7% of the total receivables balance as a financing fee, and will withhold an initial amount of 8%.(a)- Your answer is partially correctCalculate the net proceeds and the gain or loss on the disposal of receivables to Concord Financing LtdNet proceeds1657500Loss on disposal of receivables$233500i

First, we need to calculate the financing fee that Concord will charge Riverbed. This is done by…

Answered: The controller for Riverbed 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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Vision Importing Company engaged in the following transactions involving promissory notes: Jul 2 Sold engines to morgan company for $180,000 to exchange for a 90-day, 12 percent promissory note. July 15 Sold engines to level company for $96,000 in exchange for a 90-day, 14 percent note. July 30 sold engines to level company for $90,000 in exchange for a 90-day, 11 percent note. Required: For each of the notes, determine the (a) maturity date, (b) interest on the note, and (c) maturity value. (Round to the nearest cent.) Assume that the fiscal year for Vision Importing ends on August 31. How much interest income should be recorded on that date? (Round to the nearest cent.)
Bramble Corp. factors $630,000 of accounts receivable with Marin Inc., Inc. on a with recourse basis. Marin Inc. will collect the receivables. The receivable records are transferred to Marin Inc. on August 15, 2020. Marin Inc. assesses a finance charge of 3.0% of the amount of accounts receivable and also reserves an amount equal to 5.40% of accounts receivable to cover probable adjustments. Bramble 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 Bramble to record the sale of receivables, assuming the recourse obligation has a fair value of $5,900
The controller for Bramble Corporation has reached an agreement with Sheffield Financing Ltd. to sell a large portion of Bramble's past-due accounts receivable. Bramble agrees to sell $1,820,000 of accounts receivable to Sheffield with recourse. Bramble's controller estimates that the fair value of Bramble's liability to pay Sheffield for uncollectible accounts is $163.000. Sheffield will charge Bramble 9% of the total receivables balance as a financing fee, and will withhold an initial amount of 10% (a) Calculate the net proceeds and the gain or loss on the disposal of receivables to Sheffield Financing Ltd. Net proceeds ✓on disposal of receivables S $
White Corporation has entered into an agreement to transfer accounts receivable to Murphy Company. Under the terms of this agreement, White receives 80% of the value of all the transferred accounts receivable (to reflect credit risk) and is charged a 1% service charge, which is based upon the dollar amount of transferred receivables. Interest is charged at an annual interest rate of 12% of any outstanding loan balance. The transferred receivables will continue to be collected by White with any cash flows being remitted to Murphy at the end of each month. White is not allowed to transfer the receivables to anyone else. White normally transfers its accounts receivable. The following selected 2019 transactions relate to this agreement: Dec 1 Accounts receivable of $160,000 are transferred. 11 A sales return of $1,000 on a transferred account is made. 31 Collections are made on $82,000 of the transferred accounts receivable plus interest for the month of December. This amount is…
On June 30, 2021, the Esquire Company sold merchandise to a customer and accepted a noninterest-bearing note in exchange. The note requires payment of $20,000 on March 31, 2022. The fair value of the merchandise exchanged is $18,500. Esquire views the financing component of this contract as significant.Required: 1. Prepare journal entries to record the sale of merchandise (omit any entry that might be required for the cost of the goods sold), any December 31, 2021 interest accrual, and the March 31, 2022 collection.2. What is the effective interest rate on the note?
Pearl Woodcrafters sells $227,500 of receivables to Commercial Factors, Inc. on a with recourse basis. Commercial assesses a finance charge of 6% and retains an amount equal to 5% of accounts receivable. Pearl estimates that the recourse liability has a fair value of $4,695 instead of $9,390 estimated earlier. Prepare the journal entry for Pearl to record the sale. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit What are the effects of this change in the value of the recourse liability on Pearl's financial statements? Pearl's income will be * by $ Pearl's will be * by $
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?
On May 1, 2021, AAA and BBB formed a joint operation to acquire and sell a special type of merchandise. The contractual arrangements provide that AAA is to manage the joint operation for a fee and that gain and losses are to be divided equally. On May 1, 2021, BBB invests cash of P52,000, which P50,000 was used to purchase merchandise. AAA incurs expenses amounting to P2,500. On May 20, one half of the merchandise was sold for P36,000 cash. In the books of BBB, the Investment in Joint Operation account on May 30, 2021 would show a balance of:
5. Packwood, Inc. factors $250,000 of its accounts receivable to M&B Finance with recourse. M&B charges a fee of 1% and withholds 10% of the face amount of the receivables to cover possible uncollectible accounts and sales returns. The bank deducts the fee from the cash given to Packwood at the outset of the arrangement. Packwood estimates the fair value of the recourse obligation is equal to $6,000. Packwood estimates the fair value of the 10% of the face amount of receivables equals $22,500. Packwood does not retain control over the factored receivables. Prepare any journal entries Packwood, Inc. would make to record the factoring.
Sheldon factored $200,000 of accounts receivable with Penny Factors on a with recourse basis. Penny assesses a 5% finance charge. Sheldon estimates the fair value of the recourse obligation to be $1,500. Penny Factors pays Sheldon 90% of the factored receivables. Sheldon estimates that the value of the final 10% of receivables is $16,000. Journalize the sale of the receivables.
Subject :- Accounting
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