Question 4 Wilson Corporation reports a current ratio of 2-to-1 in its 2019 financial statements. The statement of financial position shows current assets of $1,021,600 and current liabilities of $535,200. Accounts receivable are $300,160 of the current assets. Wilson Corporation is considering transferring $140,000 of the accounts receivable with a 90-day term to a financial institution. There are no bad debts associated with these accounts receivable. Proceeds of $123,400 are expected from the transaction. Required: 1) Prepare the journal entry to record the transfer as a sale/derecognition. 2) Prepare the journal entry to record the transfer as a borrowing. General Journal Account Titles and Explanation Ref Debit Credit
Question 4 Wilson Corporation reports a current ratio of 2-to-1 in its 2019 financial statements. The statement of financial position shows current assets of $1,021,600 and current liabilities of $535,200. Accounts receivable are $300,160 of the current assets. Wilson Corporation is considering transferring $140,000 of the accounts receivable with a 90-day term to a financial institution. There are no bad debts associated with these accounts receivable. Proceeds of $123,400 are expected from the transaction. Required: 1) Prepare the journal entry to record the transfer as a sale/derecognition. 2) Prepare the journal entry to record the transfer as a borrowing. General Journal Account Titles and Explanation Ref Debit Credit
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter6: Cash And Receivables
Section: Chapter Questions
Problem 9E: Estimating Bad Debts from Receivables Balances The following information is extracted from Shelton...
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