Question: Tidal Company has significant amounts of trade accounts receivable In

Tidal Company has significant amounts of trade accounts receivable. In March of this year, Tidal assigned specific trade accounts receivable to Adapted Herb Finance Company on a with-recourse, non notification basis as collateral for a loan. Tidal signed a note and received 70% of the amount assigned. Tidal was charged a 5% finance fee and agreed to pay interest at 12% on the unpaid balance. Some specific accounts of the assigned receivables were written off as uncollectible. The remainders of the trade accounts receivable assigned were collected by Tidal in March and April of this year. Tidal paid Herb Finance in foil at the end of April of this year.
Tidal also sold some special order merchandise and received a 90 day, 10%, interest bearing note receivable on July 1 of this year. After 30 days, the note receivable was sold with recourse at 14% at a bank.
1. Explain how Tidal should account for the transactions described here for the assignment of trade accounts receivable.
2. Explain how Tidal should determine the amount of the discount for the 90 day note receivable sold at the bank.
3. Explain how the sale of the 90-day note receivable should be accounted for.

View Solution:

Sale on SolutionInn
  • CreatedOctober 05, 2015
  • Files Included
Post your question