Question

On 1/1/Y2 Santee Corp. sold $1M of accounts receivable to Finco Inc. Finco charged a fee...

On 1/1/Y2 Santee Corp. sold $1M of accounts receivable to Finco Inc. Finco charged a fee equal to 5% of the receivables and retained an amount equal to 2% of the receivables for sales returns. i. Prepare Santee's journal entry to record the sale of receivables on 1/1/Y2, assuming the factoring arrangement is without recourse.

Now assume that the arrangement was with recourse, and that the fair market value of the recourse liability was estimated at $25,000. Prepare the journal entry for Santee Corp. on 1/1/Y2.

Assume that Santee factored the receivables with recourse and that it made two payments of $10,000 to Finco on 6/30/Y2 and on 12/31/Y2 (the end of the recourse period). Prepare Santee’s journal entries to record both payments.

Prepare Finco’s entries to record the payments received from Santee during the recourse period.

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Artic Inc. is having a hard time collecting its outstanding Accounts Receivables from its customers. Artic...
Artic Inc. is having a hard time collecting its outstanding Accounts Receivables from its customers. Artic Inc. decides to factor $700,000 of its Accounts Receivables to Collection Co. on 1/1/20. Collection Co. assesses a finance charge of 5.85% of the factored Accounts Receivables, and retains an amount equal to 4.25% of the factored Accounts Receivables for probable adjustments. **You may round your answers to the nearest dollar. (A) If the factoring between Artic Inc. and Collection Co. is done without...
Mountain High Ice Cream Company reports under IFRS. Mountain High transferred $72,000 of accounts receivable to...
Mountain High Ice Cream Company reports under IFRS. Mountain High transferred $72,000 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 $6,200). Mountain High anticipates a $4,200 recourse obligation. The bank charges a 2%...
Mountain High Ice Cream Company transferred $76,000 of accounts receivable to the Prudential Bank. The transfer...
Mountain High Ice Cream Company transferred $76,000 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 $6,600). Mountain High anticipates a $4,600 recourse obligation. The bank charges a 2% fee (2% of $76,000), and...
On June 30, 2021, Blondie Fixtures was considering alternatives to bolster its cash position. Option One...
On June 30, 2021, Blondie Fixtures was considering alternatives to bolster its cash position. Option One called for transferring $390,000 in accounts receivable to Dogwood Finance Company without recourse for a 4% fee. Option Two calls for Blondie to transfer the $390,000 in receivables to Dogwood with recourse. Dogwood's charges a 3% fee for receivables factored with recourse. Option Two meets the conditions to be considered a sale, but Blondie estimates a $2,900 recourse liability. Under either option, Dogwood will...
Mountain High Ice Cream Company reports under IFRS. Mountain High transferred $62,000 of accounts receivable to...
Mountain High Ice Cream Company reports under IFRS. Mountain High transferred $62,000 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 $5,200). Mountain High anticipates a $3,200 recourse obligation. The bank charges a 3%...
On June 30, 2021, Blondie Fixtures was considering alternatives to bolster its cash position. Option One...
On June 30, 2021, Blondie Fixtures was considering alternatives to bolster its cash position. Option One called for transferring $400,000 in accounts receivable to Dogwood Finance Company without recourse for a 5% fee. Option Two calls for Blondie to transfer the $400,000 in receivables to Dogwood with recourse. Dogwood's charges a 4% fee for receivables factored with recourse. Option Two meets the conditions to be considered a sale, but Blondie estimates a $3,000 recourse liability. Under either option, Dogwood will...
On June 30, 2016, Blondie Fixtures was considering alternatives to bolster its cash position. Option One...
On June 30, 2016, Blondie Fixtures was considering alternatives to bolster its cash position. Option One called for transferring $370,000 in accounts receivable to Dogwood Finance Company without recourse for a 6% fee. Option Two calls for Blondie to transfer the $370,000 in receivables to Dogwood with recourse. Dogwood's charges a 5% fee for receivables factored with recourse. Option Two meets the conditions to be considered a sale, but Blondie estimates a $2,700 recourse liability. Under either option, Dogwood will...
To raise more liquidity, Randy Corp. factored $70,000 of its accounts receivable with Mock Bank with...
To raise more liquidity, Randy Corp. factored $70,000 of its accounts receivable with Mock Bank with recourse on 1/1/2018. Mock Bank agreed to collect the accounts receivable after the transaction, assessed a finance charge of 2% of the amount transferred and withheld an amount equal to 3% of the amount to cover probable uncollectible accounts. Randy prepared financial statements under ASPE. Assume the transaction qualified for the sale of receivables treatment. The recourse obligation had a fair value of $3,000....
To raise more liquidity, Randy Corp. factored $70,000 of its accounts receivable with Mock Bank with...
To raise more liquidity, Randy Corp. factored $70,000 of its accounts receivable with Mock Bank with recourse on 1/1/2018. Mock Bank agreed to collect the accounts receivable after the transaction, assessed a finance charge of 2% of the amount transferred and withheld an amount equal to 3% of the amount to cover probable uncollectible accounts. Randy prepared financial statements under ASPE. Assume the transaction qualified for the sale of receivables treatment. The recourse obligation had a fair value of $3,000....
To raise more liquidity, Randy Corp. factored $70,000 of its accounts receivable with Mock Bank with...
To raise more liquidity, Randy Corp. factored $70,000 of its accounts receivable with Mock Bank with recourse on 1/1/2018. Mock Bank agreed to collect the accounts receivable after the transaction, assessed a finance charge of 2% of the amount transferred and withheld an amount equal to 3% of the amount to cover probable uncollectible accounts. Randy prepared financial statements under ASPE. Assume the transaction qualified for the sale of receivables treatment. The recourse obligation had a fair value of $3,000....
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT