Mountain High Ice Cream Company transferred $60,000 of accounts receivable to the Prudential Bank. The transfer was

Question:

Mountain High Ice Cream Company transferred $60,000 of to the Prudential Bank. The transfer was made without recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10%. When the bank collects the receivables, it will remit to Mountain High the retained amount (which Mountain estimates has a fair value of $5,000) less a 2% fee (2% of the total factored amount).

Required:

Prepare the journal entry to record the transfer on the books of Mountain High assuming that the sale criteria are met.

Accounts Receivable
Accounts 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...