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Prepare the journal entry to record the transfer on books

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Reference no: EM132721620

Question - Mountain High Ice Cream Company transferred $60,000 of accounts receivable 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.

Reference no: EM132721620

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