contestada

E7-16 (Transfer of Receivables with Recourse) Beyoncé Corporation factors $175,000 of accounts receivable
with Kathleen Battle Financing, Inc. on a with recourse basis. Kathleen Battle Financing will collect
the receivables. The receivables records are transferred to Kathleen Battle Financing on August 15, 2014.
Kathleen Battle Financing assesses a finance charge of 2% of the amount of accounts receivable and also
reserves an amount equal to 4% of accounts receivable to cover probable adjustments.
Instructions
(a) What conditions must be met for a transfer of receivables with recourse to be accounted for as a
sale?
(b) Assume the conditions from part (a) are met. Prepare the journal entry on August 15, 2014, for
Beyoncé to record the sale of receivables, assuming the recourse obligation has a fair value of $2,000.

Respuesta :

cancinodavidq

Answer:

a. Transfer or receivables with recourse should be recorded as a sale only when the following conditions are met:

  • The future economic benefits of the receivables have been surrendered by the transferor.
  • The transferor's obligation under the recourse provision can be reasonably estimated.
  • The transfer can require the transfer to repurchase the receivables.

b. attached as a dcoument of excel.

Explanation:

Entry journal corporation for beyonce Corporation in document attached.

Ver imagen cancinodavidq

Otras preguntas