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Calculate the net proceeds and the gain or loss

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Question - The controller for Martinez Corporation has reached an agreement with Marigold Financing Ltd. to sell a large portion of Martinez's past-due accounts receivable. Martinez agrees to sell $1,900,000 of accounts receivable to Marigold with recourse. Martinez's controller estimates that the fair value of Martinez's liability to pay Marigold for uncollectible accounts is $171,000. Marigold will charge Martinez 8% of the total receivables balance as a financing fee, and will withhold an initial amount of 9%. Calculate the net proceeds and the gain or loss on the disposal of receivables to Marigold Financing Ltd.

Reference no: EM133067669

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