What conditions must be met for a transfer of receivables

Assignment Help Financial Accounting

Reference no: EM13130803

Strassner Corporation factors $262,500 of accounts receivable with Sultanali Financing, Inc. on a with recourse basis. Sultanali Financing will collect the receivables. The receivables records are transferred to Sultanali Financing on August 15, 2012. Sultanali Financing assesses a finance charge of 3% of the amount of accounts receivable and also reserves an amount equal to 5% of accounts receivable to cover probable adjustments.
Instructions:

(a) What conditions must be met for a transfer of receivables with recourse to be accounted for as a sale?

(b) Assume the conditions from part (a) are met. Prepare the journal entry on August 15, 2012, for Strassner to record the sale of receivables, assuming the recourse obligation has a fair value of $3,000.

Reference no: EM13130803

Questions Cloud

Explain how much interest should she include in gross income : The son quit school after one semester and Klemm used the remaining money to buy her son a car. If Klemm's AGI is $25,000, explain how much interest should she include in gross income?

Amount of the semi-annual interest expense : The bonds were issued for $817,860 cash, which provided the holders an annual yield of 8%. What is the amount of the semi-annual interest expense?

Fractions in real life : Describe a real-world problem you have encountered, in either your personal or professional life, in which you needed to use fractions or decimals to solve the problem.

Explain are outcomes in the sample space equally likely : Either the seed germinates, or it does not. What is the sample space in this problem? Do the probabilities assigned to the sample space add up to 1? Explain. Are the outcomes in the sample space equally likely?

What conditions must be met for a transfer of receivables : What conditions must be met for a transfer of receivables with recourse to be accounted for as a sale?

Budgeted purchases for the fourth quarter : If the December 31 inventory is targeted at $41,500, budgeted purchases for the fourth quarter should be:

Determining egyptian fractions : Show that any rational number a/b , between 0 and 1, can be written as an Egyptian fraction. Can an irrational number between 0 and 1 ever be expressed as an Egyptian fraction? Why?

Define reactions of alcohols : Reactions of Alcohols, Show how ethanol and cyclohexanol may be used to synthesize cyclohexyl ethyl ether using tosylation followed by Williamson ether synthesis.

What is the pressure in torr : At 27.7mL sample CO2(g) was collected over water at 25.0 degrees celsius and 1.00 atm. What is the pressure in torr due to CO2(g)?

User Account

All Pages