Bohannon SA factors 250,000 of accounts receivable with Winkler Financing, Inc. on a without guarantee (no recourse)
Question:
Bohannon SA factors €250,000 of accounts receivable with Winkler Financing, Inc. on a without guarantee (no recourse) basis. Winkler Financing will collect the receivables. The receivables records are transferred to Winkler Financing on August 15, 2019. Winkler 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 guarantee to be accounted for as a sale?
b. Assume the conditions from part (a) are met. Prepare the journal entry on August 15, 2019, for Bohannon to record the sale of receivables.
Accounts ReceivableAccounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...
Step by Step Answer:
a According to the IASB determining whether receivables that are tr...View the full answer
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
