Sheffield Inc. transferred $703,000 of its accounts receivable to Independent Trust on Nov 1, 2020, receiving...
Sheffield Inc. transferred $703,000 of its accounts receivable to Independent Trust on Nov 1, 2020, receiving 96% of the receivables balance as proceeds. The agreement specified that the receivables would become the property of Independent Trust, and Independent could manage the receivables or resell them as it wished. In addition, the agreement specified that Sheffield would have no right to repurchase the receivables from Independent, and included a recourse provision with an estimated value of $17,400.
1. Does this transaction meet the requirements to be treated as a sale of receivables?
2. Calculate the loss on disposal of receivables.
3. Prepare a journal entry to record this transaction. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
|
Account Titles and Explanation |
Debit |
Credit |
Homework Answers
Answer 1
Yes it will be treated as sale of receivable as it meet all the requirements for this
Answer 2
Loss on disposal of receivable = (Receivable - 96% of receivable) + Recourse liability
= (703000-96% of $703000) + $17400
Loss on disposal of receivable = $45520
.Answer 3
Journal entry for the sale of receivable will be as following
| Date | Account Titles and Explanation | Debit | Credit |
| Cash | 674880 | ||
| Loss from factor | 45520 | ||
| Recourse liability | 17400 | ||
| Accounts Receivable | 703000 | ||
| (Sale of Receivable recorded) |
Add Answer to:
Sheffield Inc. transferred $703,000 of its accounts receivable
to Independent Trust on Nov 1, 2020, receiving...
Wildhorse Corp. factors $441,000 of accounts receivable with Sheffield Finance Corporation on a without recourse basis...
Wildhorse Corp. factors $441,000 of accounts receivable with Sheffield Finance Corporation on a without recourse basis on July 1, 2020 The receivables records are transferred to Sheffield Finance, which will receive the collections. Sheffield Finance assesses a finance charge of 1.80% of the amount of accounts receivable and retains an amount equal to 6 % of accounts receivable to cover sales discounts, returns, and allowances. The transaction is to be recorded as a sale (a) Your answer is correct Prepare...
Sheffield Corp. factors $414,000 of accounts receivable with Tamarisk Finance Corporation on a without recourse basis...
Sheffield Corp. factors $414,000 of accounts receivable with Tamarisk Finance Corporation on a without recourse basis on July 1, 2020. The receivables records are transferred to Tamarisk Finance, which will receive the collections. Tamarisk Finance assesses a finance charge of 1.60% of the amount of accounts receivable and retains an amount equal to 5% of accounts receivable to cover sales discounts, returns, and allowances. The transaction is to be recorded as a sale. (a) Your answer has been saved. See...
E7.18 (LO 7, 8) (Transfer of Receivables with Servicing Retained) Lute Retail Ltd. follows ASPE. It...
E7.18 (LO 7, 8) (Transfer of Receivables with Servicing Retained) Lute Retail Ltd. follows ASPE. It transfers $355,000 of its accounts receivable to an independent trust in a securitization transaction on July 11, 2020, receiving 96% of the receivables balance as proceeds. Lute will continue to manage the customer accounts, including their collection. Lute estimates this obligation has a liability value of $12,500. In addition, the agreement includes a recourse provision with an estimated value of $9,900. The transaction is...
On April 1, 2020, Wildhorse Company assigns $549,400 of its accounts receivable to the Third National...
On April 1, 2020, Wildhorse Company assigns $549,400 of its
accounts receivable to the Third National Bank as collateral for a
$301,600 loan due July 1, 2020. The assignment agreement calls for
Wildhorse to continue to collect the receivables. Third National
Bank assesses a finance charge of 3% of the accounts receivable,
and interest on the loan is 10% (a realistic rate of interest for a
note of this type). Collapse question part (a) Partially correct
answer. Your answer is...
Question 9 On May 1, Dexter, Inc. factored $1,290,000 of accounts receivable with Quick Finance on...
Question 9 On May 1, Dexter, Inc. factored $1,290,000 of accounts receivable with Quick Finance on a without recourse basis. Under the arrangement, Dexter was to handle disputes concerning service, and Quick Finance was to make the collections, handle the sales discounts, and absorb the credit losses. Quick Finance assessed a finance charge of 6% of the total accounts receivable factored and retained an amount equal to 1% of the total receivables to cover sales discounts. Prepare the journal entry...
On April 1, 2020, Grouper Company assigns $503,700 of its accounts receivable to the Third National...
On April 1, 2020, Grouper Company assigns $503,700 of its accounts receivable to the Third National Bank as collateral for a $340,000 loan due July 1, 2020. The assignment agreement calls for Grouper to continue to collect the receivables. Third National Bank assesses a finance charge of 3% of the accounts receivable, and interest on the loan is 10% (a realistic rate of interest for a note of this type). Your answer is partially correct. Prepare the April 1, 2020,...
On April 1, 2020, Grouper Company assigns $503,700 of its accounts receivable to the Third National...
On April 1, 2020, Grouper Company assigns $503,700 of its accounts receivable to the Third National Bank as collateral for a $340,000 loan due July 1, 2020. The assignment agreement calls for Grouper to continue to collect the receivables. Third National Bank assesses a finance charge of 3% of the accounts receivable, and interest on the loan is 10% (a realistic rate of interest for a note of this type). Prepare the April 1, 2020. journal entry for Grouper Company....
Problem 7-5 Presented below is information related to the Accounts Receivable accounts of Blossom Inc. during the curren...
Problem 7-5
Presented below is information related to the Accounts
Receivable accounts of Blossom Inc. during the current year
2017.
1. An aging schedule of the accounts receivable as
of December 31, 2017, is as follows.
Age
Net Debit Balance
% to Be Applied after
Correction Is Made
Under 60 days
$171,900
1%
60–90 days
135,300
3%
91–120 days
39,500
*
5%
Over 120 days
22,800
$3,700 definitely
uncollectible;
estimated remainder uncollectible is 23%
$369,500
*The $3,500 write-off of receivables...
Wildhorse Corp. factors $441,000 of accounts receivable with Sheffield Finance Corporation on a without recourse basis on July 1, 2020 The receivables records are transferred to Sheffield Finance, which will receive the collections. Sheffield Finance assesses a finance charge of 1.80% of the amount of accounts receivable and retains an amount equal to 6 % of accounts receivable to cover sales discounts, returns, and allowances. The transaction is to be recorded as a sale (a) Your answer is correct Prepare...
Sheffield Corp. factors $414,000 of accounts receivable with Tamarisk Finance Corporation on a without recourse basis on July 1, 2020. The receivables records are transferred to Tamarisk Finance, which will receive the collections. Tamarisk Finance assesses a finance charge of 1.60% of the amount of accounts receivable and retains an amount equal to 5% of accounts receivable to cover sales discounts, returns, and allowances. The transaction is to be recorded as a sale. (a) Your answer has been saved. See...
On April 1, 2020, Wildhorse Company assigns $549,400 of its
accounts receivable to the Third National Bank as collateral for a
$301,600 loan due July 1, 2020. The assignment agreement calls for
Wildhorse to continue to collect the receivables. Third National
Bank assesses a finance charge of 3% of the accounts receivable,
and interest on the loan is 10% (a realistic rate of interest for a
note of this type). Collapse question part (a) Partially correct
answer. Your answer is...
Question 9 On May 1, Dexter, Inc. factored $1,290,000 of accounts receivable with Quick Finance on a without recourse basis. Under the arrangement, Dexter was to handle disputes concerning service, and Quick Finance was to make the collections, handle the sales discounts, and absorb the credit losses. Quick Finance assessed a finance charge of 6% of the total accounts receivable factored and retained an amount equal to 1% of the total receivables to cover sales discounts. Prepare the journal entry...
On April 1, 2020, Grouper Company assigns $503,700 of its accounts receivable to the Third National Bank as collateral for a $340,000 loan due July 1, 2020. The assignment agreement calls for Grouper to continue to collect the receivables. Third National Bank assesses a finance charge of 3% of the accounts receivable, and interest on the loan is 10% (a realistic rate of interest for a note of this type). Your answer is partially correct. Prepare the April 1, 2020,...
On April 1, 2020, Grouper Company assigns $503,700 of its accounts receivable to the Third National Bank as collateral for a $340,000 loan due July 1, 2020. The assignment agreement calls for Grouper to continue to collect the receivables. Third National Bank assesses a finance charge of 3% of the accounts receivable, and interest on the loan is 10% (a realistic rate of interest for a note of this type). Prepare the April 1, 2020. journal entry for Grouper Company....
Problem 7-5
Presented below is information related to the Accounts
Receivable accounts of Blossom Inc. during the current year
2017.
1. An aging schedule of the accounts receivable as
of December 31, 2017, is as follows.
Age
Net Debit Balance
% to Be Applied after
Correction Is Made
Under 60 days
$171,900
1%
60–90 days
135,300
3%
91–120 days
39,500
*
5%
Over 120 days
22,800
$3,700 definitely
uncollectible;
estimated remainder uncollectible is 23%
$369,500
*The $3,500 write-off of receivables...
Most questions answered within 3 hours.
-
You have just been hired by the EPA to help with the new gas
mileage standards...
asked 2 minutes ago -
4) A firm is hit by increases in its wage rate, w.
a) How does this...
asked 17 minutes ago -
A square current loop 5.4 cm on each side carries a 510 mA
current. The loop...
asked 2 hours ago -
What are five tips in conducting knowledge assessment/literature
review research? Each of these tips needs to...
asked 3 hours ago -
Antigen presenting cells link innate and adaptive immune
responses. In the theoretical scenario where phagosomes cannot...
asked 3 hours ago -
Dealing with conflict, in my opinion, is a skill and an art. I
believe that those...
asked 3 hours ago -
6. A long straight wire with circular cross section and radius
1.5 cm carries a 1.2...
asked 3 hours ago -
Deacon Corporation has provided the following financial data
from its balance sheet and income statement:
Year...
asked 4 hours ago -
List and discuss at least three variables from everyday life for
which you expect the variable ...
asked 4 hours ago -
A high-pass filter consists of a 1.60 μF capacitor in series
with a 125 Ω resistor....
asked 4 hours ago -
A newly developed artificial intelligence has trouble
distinguishing hand-written numbers from hand-written alphabets.
There are pictures...
asked 4 hours ago -
The carbonate ion CO3 2- has multiple resonance structures.
a. Draw them and assign the hybridization...
asked 4 hours ago