Do not give solution in image The controller for Culver Corporation has reached an agreement with Pronghorn Financing Ltd. to sell a large portion of Culver'spast-due accounts receivable. Culver agrees to sell $1,850,000 of accounts receivable to Pronghorn without recourse. Culver'scontroller estimates that the fair value of Culver's liability to pay Pronghorn for uncollectible accounts is $166,000. Pronghorn willcharge Culver 9% of the total receivables balance as a financing fee, and will withhold an initial amount of 10%.Calculate the net proceeds and the gain or loss on the disposal of receivables to Pronghorn Financing Ltd.Net proceedsLosson disposal of receivablesAccount Titles and ExplanationCashPrepare the journal entry on the books of Culver Corporation to record the disposal of receivables to Pronghorn Financing Ltd.(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" forthe account titles and enter O for the amounts.)Due from FactorLoss on Disposal of Receivables$Accounts Receivable$IDebit166500CreditJON!1850000

Sales are made on cash and credit basis. The amount to be collected from sales made on credit basis…

Answered: The controller for Culver Corporation…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 16P

See similar textbooks

Similar questions

The controller for Concord Corporation has reached an agreement with Riverbed Financing Ltd. to sell a large portion of Concord’s past-due accounts receivable. Concord agrees to sell $1,840,000 of accounts receivable to Riverbed with recourse. Concord’s controller estimates that the fair value of Concord’s liability to pay Riverbed for uncollectible accounts is $165,000. Riverbed will charge Concord 8% of the total receivables balance as a financing fee, and will withhold an initial amount of 9%.Calculate the net proceeds and the gain or loss on the disposal of receivables to Riverbed Financing Ltd. Net proceeds $ ( Loss / Gain ) on disposal of receivables $ Prepare the journal entry on the books of Concord Corporation to record the disposal of receivables to Riverbed Financing Ltd. (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…
The controller for Bramble Corporation has reached an agreement with Sheffield Financing Ltd. to sell a large portion of Bramble's past-due accounts receivable. Bramble agrees to sell $1,820,000 of accounts receivable to Sheffield without recourse. Bramble's controller estimates that the fair value of uncollectible accounts is $163,000. Sheffield will charge Bramble 9% of the total receivables balance as a financing fee, and will withhold an initial amount of 10%. The transaction is treated as a sale. (a) - Your answer is partially correct. Calculate the net proceeds and the gain or loss on the disposal of receivables to Sheffield Financing Ltd. Net proceeds Loss V on disposal of receivables $ $ 1493200 326800
The controller for Ayayai Corporation has reached an agreement with Whispering Winds Financing Ltd. to sell a large portion of Ayayai's past-due accounts receivable. Ayayai agrees to sell $1,800,000 of accounts receivable to Whispering Winds with recourse. Ayayai's controller estimates that the fair value of Ayayai's liability to pay Whispering Winds for uncollectible accounts is $161,000. Whispering Winds will charge Ayayai 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 Whispering Winds Financing Ltd. Net proceeds Loss LA LA on disposal of receivables $ 1530000 126000
The controller for Bridgeport Corporation has reached an agreement with Sarasota Financing Ltd. to sell a large portion of Bridgeport's past-due accounts receivable. Bridgeport agrees to sell $1,830,000 of accounts receivable to Sarasota without recourse. Bridgeport's controller estimates that the fair value of uncollectible accounts is $164,000. Sarasota will charge Bridgeport 7% of the total receivables balance as a financing fee, and will withhold an initial amount of 8%. The transaction is treated as a sale. (a) Your answer is partially correct. Calculate the net proceeds and the gain or loss on the disposal of receivables to Sarasota Financing Ltd. Net proceeds Loss on disposal of receivables 1555500 1391500 SUPPORT
Binsford, Inc., sells $175,000 of its accounts receivable ($172,000 net of the allowance for credit losses) to Upshaw Finance with recourse. Upshaw immediately remits cash equal to 90% of the gross receivable amount and retains the remaining 10% to cover its factoring fee (equal to 4% of the gross amount of factored receivables) and any bad debts under the agreement's recourse provisions. Binsford estimates the fair value of the recourse obligation to be $4,000. Required: 1. Prepare the journal entry Binsford would make to record the factoring. 2. Prepare Binsford's journal entry to record any subsequent cash received from Upshaw Finance if Upshaw collects all of the factored receivables except for $2,500 resulting from a bad debt.
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…
Serena Inc. transferred $76,000 of accounts receivable to the Deni Bank. The transfer was made with recourse. Deni remits 89% of the factored amount to Serena and retains 11% to cover sales returns and allowances. When the bank collects the receivables, it will remit to Serena the retained amount (which Serena estimates has a fair value of $6,000). Serena anticipates a $4,000 recourse obligation. The bank charges a 2.5% fee (2.5% of $76,000), and requires that amount to be paid at the start of the factoring arrangement. Instructions: Prepare the journal entry to record the transfer on the books of Serena Inc. assuming that the sale criteria are met.
5. Packwood, Inc. factors $250,000 of its accounts receivable to M&B Finance with recourse. M&B charges a fee of 1% and withholds 10% of the face amount of the receivables to cover possible uncollectible accounts and sales returns. The bank deducts the fee from the cash given to Packwood at the outset of the arrangement. Packwood estimates the fair value of the recourse obligation is equal to $6,000. Packwood estimates the fair value of the 10% of the face amount of receivables equals $22,500. Packwood does not retain control over the factored receivables. Prepare any journal entries Packwood, Inc. would make to record the factoring.
Logitech Corporation transferred $100,000 of accounts receivable to a local bank. The transfer was made without recourse. The local bank remits 85% of the factored amount to Logitech and retains the remaining 15%. When the bank collects the receivables, it will remit to Logitech the retained amount less a fee equal to 3% of the total amount factored. Logitech estimates a fair value of its 15% interest in the receivables of $11,000 (not including the 3% fee). What is the effect of this transaction on the company’s assets, liabilities, and income before income taxes?
Mountain High Ice Cream Company transferred $79,000 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 $6,900). Mountain High anticipates a $4,900 recourse obligation. The bank charges a 3% fee (3% of $79,000), 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. Event 1 General Journal Debit Credit >
es Mountain High Ice Cream Company reports under IFRS. Mountain High transferred $64,000 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 $5,400). Mountain High anticipates a $3,400 recourse obligation. The bank charges a 1% fee (1% of $64,000), 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…
Japee, Inc. assigned P240,000 of its receivables to PJTC Finance company. A note payable was executed. The contract provided that PJTC would advance 85% of the gross amount of the receivables. The contract specified recourse and non-notification; therefore, Japee’s debtors continue to remit directly to it; the cash from customers is then remitted to the finance company. The cash remitted is first applied to the finance charges, with the remainder applied to the principal. During the first month, customers owing P164,000 paid cash, less sales returns and allowances of P6,400. The finance charge at the end of the first month was P1,400.How much is the disclosed equity in assigned accounts as of the end of the first month?

SEE MORE QUESTIONS

Recommended textbooks for you

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

SEE MORE TEXTBOOKS