A company with $ 200,000 in receivables could sell them for $ 169,000 without recourse or for $ 195,000 with recourse. What do the terms “with recourse” and “without recourse” mean? Why is the “without recourse” alternative more expensive? How could the transfer be recorded?
Answer to relevant QuestionsUnder what conditions will a transfer of receivables be recognized as a sale/derecognition? As a borrowing? What financial statement ratios are particularly affected by these alternatives?Vish Limited reported a cash balance of $ 36,000 in the general ledger, but the bank statement reported a balance of $ 27,900 at the end of September 20X9. You have ascertained that the bank cashed a cheque on this account, ...The net accounts receivable on the books of GJY Corporation as of 1 January 20X3 are as follows:Accounts receivable .......... $ 562,000 Less: Allowance for sales discounts.... 12,000 Allowance for doubtful accounts.... ...Belanger Ld. reports a current ratio of 2- to- 1 in its 20X2 financial statements. The statement of Financial position shows current assets of $ 2,540,500 and current liabilities of $ 1,284,000. Accounts receivable are $ ...On 1 January 20X5, Spencer Inc. sold merchandise ( cost, $ 8,000; sales value, $ 14,000) to Bryden, Inc. and received a non- interest- bearing note in return. The note requires $ 15,730 to be paid in a lump sum on 31 ...
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