On December 1, 2021, Snow Unlimited Resorts, Inc. factored $465,000 ofaccounts receivable with Fast Eddie’s Overnight Finance on a without recoursebasis. Under the arrangement, Snow Unlimited was to handle any issuesconcerning disputed billings.
Fast Eddie was to make the collections, and absorb any credit losses foruncollectible accounts. Fast Eddie assessed a finance charge of 8.00% of the totalaccounts receivable factored and retained an amount equal to 12% of the totalreceivables to cover any disputed billings.
Instructions
(a) Prepare the journal entry required on the books of Snow Unlimited Resorts forthe December 1, 2021 transaction.

(b) Prepare the journal entry required on the books of Fast Eddie’s OvernightFinance for the December 1, 2021 transaction.
(c) Assume Snow Unlimited Resorts, Inc. had factored the $465,000 of accountsreceivable with Fast Eddie’s Overnight Finance on a with recourse basis instead.The recourse provision has a fair value of $15,000. Prepare the journal entryrequired on the books of Snow Unlimited Resorts for the December 1, 2021transaction with recourse.
(d) Prepare the entry on Snow Unlimited Resorts, Inc. books if a client disputed abilling and was given a credit adjustment on their account in the amount of $3,500.
(e) Prepare the entry on Fast Eddie’s books after being notified of the creditadjustment. Note: the account was included in the total accounts factored with FastEddie’s Overnight Finance and was still outstanding (unpaid) at the time of thecredit adjustment.

Answer rating: 100% (QA)

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