Question

Hum Corp. has accounts receivable of $ 460,000. The company transfers these accounts receivable to a financial institution. There are no bad debts associated with these accounts receivable. Proceeds of $ 444,500 are received from the transfer. The transfer is on a non- notification basis, which means that the customers pay Hum, and Hum remits the cash to the financial institution. The customers pay $ 460,000 to Hum on schedule, and the cash remittance is forwarded to the financial institution.

Required:
Record all journal entries for the sequence of events assuming:
1. The transfer is recorded as a sale/ derecognition, and
2. The transfer is recorded as a borrowing.



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  • CreatedFebruary 17, 2015
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