Question
In: Accounting
Mountain High Ice Cream Company transferred $70,000 of accounts receivable to the Prudential Bank.
Mountain High Ice Cream Company transferred $70,000 of accounts receivable to the Prudential Bank. The transfer was made without recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10%. 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) less a 2% fee (2% of the total factored amount).
Required:
Prepare the journal entry to record the transfer on the books of Mountain High assuming that the sale criteria are met. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Solutions
Expert Solution
| Event | Account | Debit | Credit |
| 1 | Cash (70,000*90%) | 63,000 | |
| Loss on sale of receivables | 2,400 | ||
| Receivable from factor 6000 - (70,000*2%) | 4,600 | ||
| Accounts Receivable | 70,000 |
ekkarill92 answered 2 years agoRelated Solutions
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Both companies are exactly alike except that they are located in
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