Inder Corporation is experiencing a temporary cash shortage and decides to transfer a group of its accounts receivable to Newton Company on March 22. Inder does not normally transfer its receivables. Newton accepts $110,000 of Inder’s accounts receivable, remits 80% of the accounts receivable transferred, and charges a 16% commission on the gross amount of the transferred receivables. Title to the receivables is transferred to Newton, and Newton has the right to assign, pledge, or sell the receivables. During the period, sales returns and allowances on transferred accounts amounted to $1,000.

Required:

1.Prepare all the journal entries necessary by Inder to record the preceding information assuming the transfer was without recourse.

2.Prepare all the journal entries necessary by Inder to record the preceding information assuming the transfer was with recourse and the recourse obligation had an estimated fair value of $4,900.

3.Assume that Inder uses IFRS. How would your answers to Requirements 1 and 2 change?

Answer rating: 100% (QA)

Step1 Journalentry is the recording of ... View the full answer