Vaughn Incorporated sold $166,000 of accounts receivable to Gannon Factors Inc. on a with recourse basis. Gannon assesses a 2% finance charge of the amount of accounts receivable and retains an amount equal to 6% of accounts receivable for possible adjustments. Prepare the journal entries for Vaughn Incorporated and Gannon Factors to record the sale of the accounts receivable to Gannon assuming that the recourse liability has a fair value of $9,100. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Vaughn Incorporated Gannon Factors

Vaughn Incorporated sold $166,000 of accounts receivable to Gannon Factors Inc. on a with recourse basis. Gannon assesses a 2% finance charge of the amount of accounts receivable and retains an amount equal to 6% of accounts receivable for possible adjustments. Prepare the journal entries for Vaughn Incorporated and Gannon Factors to record the sale of the accounts receivable to Gannon assuming that the recourse liability has a fair value of $9,100. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Vaughn Incorporated Gannon Factors

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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53 Thunder Company factored P5,000,000 of accounts receivable. Control was surrendered by Thunder. The transaction met the criteria to be accounted for as sale but subject to recourse for nonpayment. The fair value of the recourse obligation is P250,000. The finance company assessed a fee of 6% and retained a holdback equal to 10% of the accounts receivable. In addition, the finance company charged 12% interest computed on a weighted average time to maturity of the accounts receivable for 30 days. What amount should be reported as loss on factoring assuming the accounts are fully collected by the factor?
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 $
On December 31, 2021, LoL Co. was indebted to Garena Street Company on a P2M, 10% note. Only interest had been paid to date. Due to its financial difficulties LoL has negotiated a restructuring of its notes payable. The parties agree that LoL would settle the debt on the following terms: • Settle one half of the note by transferring land with a recorded value of P800,000, and a fair value of P900,000. • Settle one fourth of the note by transferring 200,000 shares of P1 par ordinary shares with a fair value of P1.80 per share. • Modify the terms of the remaining one fourth of the note by reducing the interest to 5%, extend the due date three years from the date of restructuring and reducing the principal to P300,000. Total gains on the settlement of debt to be recognized in profit or loss is: A.P337,306B.P340,000C.P437,306D.P577,306
Mountain High Ice Cream Company reports under IFRS. Mountain High transferred $70,000 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 $6,000). Mountain High anticipates a $4,000 recourse obligation. The bank charges a 1% fee (1% of $70,000), 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 entry…
Lucky company borrowed an amount of money from ZER Finance Co. In return, ZER Finance Co received a $ 200,000, 4 year, 6% note from Lucky. On the date of the transaction, the market rate on interest was 8% for a similar note. Instructions: Calculate the net carrying value of the notes receivable on the books of ZER Finance, at the end of year one assuming that Zer is using effective interest method to amortize discount or premium on note receivable The following information might help you: Present value of a future sum factor, 6%, 4 years= 0.7921 Present value of a future sum factor, 8%, 4 years= 0.7350 Present value of an ordinary annuity factor, 6%, 4 years= 3.5 Present value of an ordinary annuity factor, 8%, 4 years= 3.3 (When writing your answer do not use commas or sign of the dollar. For example, if your answer is $1,500, write it as 1500) Answer:
XYZ Services sells (without recourse) $100,000 of receivables to a bank on 2/1/20. The bank retains 3% of the receivables and they charge a fee equal to 2% of the receivables. What effect (if any) does the sale on 2/1/20 have on the assets, liabilities, and equity of the bank that purchases the receivables
Mountain High Ice Cream Company transferred $66,000 of accounts receivable to the Prudential Bank. The transfer was made with recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10% 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 $5,600). Mountain High anticipates a $3,600 recourse obligation. The bank charges a 2% fee (2% of $66,000), and requires that amount to be paid at the start of the factoring arrangement. Required: Prepare the journal entry to record the transfer on the books of Mountain High assuming that the sale criteria are met. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list Journal entry worksheet 1 Record the transfer of accounts receivable. Note: Enter debits before credits. General Journal Debit Credit Event 1 Cash Loss…
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The controller for Riverbed Corporation has reached an agreement with Concord Financing Ltd. to sell a large portion of Riverbed's past-due accounts receivable. Riverbed agrees to sell $1,950,000 of accounts receivable to Concord with recourse. Riverbed's controller estimates that the fair value of Riverbed's liability to pay Concord for uncollectible accounts is $177,000. Concord will charge Riverbed 7% of the total receivables balance as a financing fee, and will withhold an initial amount of 8%. (a) - Your answer is partially correct Calculate the net proceeds and the gain or loss on the disposal of receivables to Concord Financing Ltd Net proceeds 1657500 Loss on disposal of receivables $ 233500 i
Mountain High Ice Cream Company transferred $64.000 of accounts receivable to the Prudential Bank. The transfer was made with recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10% 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 2% fee (2% of $64.000), and requires that amount to be paid at the start of the factoring arrangement. Required: Prepare the journal entry to record the transfer on the books of Mountain High assuming that the sale criteria are met. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
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.
Sale of Receivables Hunt Incorporated sold $300,000 of accounts receivable to Gannon Factors Inc. on a with recourse basis. Gannon assesses a 2% finance charge of the amount of accounts receivable and retains an amount equal to 6% of accounts receivable for possible adjustments. Hunt estimates a recourse liability to cover bad debts of $15,000. Subsequently, the factor collected $283,000 in cash from the accounts receivable Required: Part A: Prepare the journal entry for Hunt to record the sale of the receivables to Gannon. (hint: you may or may not need all the debits and credits) 1 2 3 41 A LO 5 6 7 8 9 Ref Account Titles Adjusting Entries Debit Credit 1 2 13 4 +56 ∞ O 17 18 19