Question

Transferring Accounts Receivable Chart of Accounts General Journal Balance Sheet LIFRS Instructions General Journal Dec 1 Cash 12000 Assignment Service Orge pense 12000 White Corporation has entered into an agreement to transfer accounts receivable to Murphy Company Under the terms of this agreement, he receives 80% of the value of all the transferred courts recevable to reflect credenis) and is charged a 15 service charge, which is based upon the amount of stered receivables. Interest is charged at an avulierest rate of 1 of any outstanding loan balance. The transferred receivables will continue to be collected by White with any cash flows being reed to Murphy at the end of each month w e is not allowed to transfer the receivables to anyone else. W e nommat van accounts receivable. The following selected 2019 transactions to this greement Notes Payable 12200000 1600000 Dec 1' Accounts Receivable Assigned Accounts Receivable Dec 11" Return wilty 150.00000 1000 Accounts Receivable Assigned 10000 Dec 1 11 Dec 31 2000 Accounts receivable of $100.000 are a rred A sales return of $1.000 on a ferred account is made Collections are made on 182.000 of the transferred accounts receivable plus interest for the month of December. This amount is remited to Murphy Cash Accounts Receiv Notes Payable e d 31 Dec 31 3200000 Cach 46.000.00 Accounts 1.000.00 Required: 1. Assume thar White uses US GAAP

Answer 1

Solution:

Date	Particulars	Debit	Credit
Dec-01	Cash	126,400
	Assignment service charge (160,000*1%)	1,600
	Notes payable (160,000 * 80%)		128,000
	Accounts receivable assigned	160,000
	Accounts Receivable		160,000
Dec-11	Return Liability	1,000
	Accounts Receivable Assigned		1,000
Dec-31	Cash	82,000
	Accounts Receivable Assigned		82,000
	Notes Payable	82,000
	Interest Payable	9,840
	Cash		91,840