Prepare the journal entry on july

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Question - Pina Corp. factors $370,000 of accounts receivable with Grouper Finance Corporation on a without recourse basis on July 1, 2017. The receivables records are transferred to Grouper Finance, which will receive the collections. Grouper Finance assesses a finance charge of 1.70% of the amount of accounts receivable and retains an amount equal to 4% of accounts receivable to cover sales discounts, returns, and allowances. The transaction is to be recorded as a sale.

(a) Prepare the journal entry on July 1, 2017, for Pina Corp. to record the sale of receivables without recourse.

(b) Prepare the journal entry on July 1, 2017, for Grouper Finance Corporation to record the purchase of receivables without recourse.

Reference no: EM131671977

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