Question

E7.5 (LO 4, 5, 7) (Journalizing Various Receivable Transactions) Information on Janut Corp., which reports under ASPE, follows:

July  
1
    Janut Corp. sold to Harding Ltd. merchandise having a sales price of $9,000, terms 2/10, n/60. Ignore cost of goods sold entry.
3
Harding Ltd. returned defective merchandise having a sales price of $700. The merchandise was not saleable and was scrapped.
5
Accounts receivable of $19,000 are factored with Jackson Credit Corp. without recourse at a financing charge of 9%. Cash is received for the proceeds and collections are handled by the finance company.
9
Specific accounts receivable of $15,000 are pledged to Landon Credit Corp. as security for a loan of $11,000 at a finance charge of 3% of the loan amount plus 9% interest on the outstanding balance. Janut will continue to make the collections. All the accounts receivable pledged are past the discount period and were originally subject to a 2% discount.
Dec.  
29
Harding Ltd. notifies Janut that it is bankrupt and will be able to pay only 10% of its account. Give the entry to write off the uncollectible balance using the allowance method.
Instructions
a. Prepare all necessary journal entries on Janut Corp.'s books.

b. Would your treatment of the July 5 transaction change if Janut reported under IFRS? If yes, how?

c. What if the receivables factored on July 5 were with recourse? Would your answer change if Janut reported under IFRS or ASPE?

Answer 1

Answer The information on Jant. Comp o the merchandise harry a Scho price 9000 . Harding ltd Aų dr = 9000 . To sales (C) = 9000 Sales recognised in the book Dat July @ is marchands having scals port 2700 Sales Retorn AL W = 700 .. To Harding itd-700 Sales Return booked July 5 - Account receivahl 19000, fincu 9% Cash Accor) 17290 factoring charge (A) = 1710 To Account Receivable (Co) : 19000 The amount is recive at discont period

Julya Bank Ale Dro) =11000 To Leay Ak (CX) = 11000 Account by pleddig account reciveable 12000 Finance charge Ale (Dr) = 330 To Loan Ale (n) =330 Bank Alc. Loo 360 To interest Income (63) =360 Balance pledged security agant loin = 15000-11000 LCOOL 1006x9 = 360 fec - 29 . . Allown be Ale (.) 7470 To ale Recivable (28)= te to .

59000-700 - 8300 38300 x 10 = 830 Bad debts = 8300 -830 . = 7470 Treatmel under dale St. Jul The certain control is not retained and all risk and rewardi transfered thes. recognition so the entry would Bank Account (@r) 17290 Finance chary (@r) = 1710 cer): 1900 Ali Recevrible

Account Receliable and beckos od beakmed the recourse factoring is done all risk and rewards are not completely frons forre shell has certaer contool on the doblen The de recognition criteria has not been met from: deblons by factors is given to a seller and loss is brore in receivable factored seller in case of bad debt