Research Case 7-9 (Static) Locate and extract relevant information and authoritative support for afinancial reporting issue; financing with receivables [LO7-8]You are spending the summer working for a local wholesale furniture company, Samson Furniture, Inc. The company is considering aproposal from a local financial institution, Old Reliant Financial, to factor Samson's receivables. The company controller is unfamiliarwith the prevailing GAAP that deals with accounting for the transfer of financial assets and has asked you to do some research. Thecontroller wants to make sure the arrangement with the financial institution is structured in such a way as to allow the factoring to beaccounted for as a sale.Old Reliant has offered to factor all of the company's receivables on a "without recourse" basis. Old Reliant will remit to Samson 90%of the factored amount, collect the receivables from Samson's customers, and retain the remaining 10% until all of the receivables havebeen collected. When Old Reliant collects all of the receivables, it will remit to Samson the retained amount, less a 4% fee (4% of thetotal factored amount).Required:1. Access the relevant authoritative literature on accounting for the transfer of financial assets using the FASB Accounting StandardsCodification. You might gain access at the FASB website (www.fasb.org), from your school library, or some other source. This sourcewill specify what conditions must be met for a transfer of receivables to be accounted for as a sale (or in accounting terms,"derecognized").2. Assuming that the conditions for treatment as a sale are met, prepare Samson's journal entry to record the factoring of $400,000 ofreceivables. Assume that the fair value of the last 10% of Samson's receivables is equal to $25,000.3-a. An agreement that both entitles and obligates the transferor, Samson, to repurchase or redeem transferred assets from thetransferee, Old Reliant, maintains the transferor's effective control over those assets and the transfer is accounted for as a securedborrowing, not a sale, if and only if what conditions are met?3-b. What is the specific Codification citation that Samson would rely on in applying that accounting treatment? WIII speciTY wnat conaitions must pe met Tor a transter of receivapies to pe accountea for as a saie (or in accounting termS,"derecognized").2. Assuming that the conditions for treatment as a sale are met, prepare Samson's journal entry to record the factoring of $400,000 ofreceivables. Assume that the fair value of the last 10% of Samson's receivables is equal to $25,000.3-a. An agreement that both entitles and obligates the transferor, Samson, to repurchase or redeem transferred assets from thetransferee, Old Reliant, maintains the transferor's effective control over those assets and the transfer is accounted for as a securedborrowing, not a sale, if and only if what conditions are met?3-b. What is the specific Codification citation that Samson would rely on in applying that accounting treatment?X Answer is not complete.Complete this question by entering your answers in the tabs below.Req 1Req 2Req 3AReq 3BAssuming that the conditions for treatment as a sale are met, prepare Samson's journal entry to record the factoring of$400,000 of receivables. Assume that the fair value of the last 10% of Samson's receivables is equal to $25,000. (If noentry is required for a transaction/event, select "No journal entry required" in the first account field.)NoTransactionAccount TitleDebitCredit1Cash400,000 XLoss on sale of receivables25,000 XReceivable from factor7,000Accounts receivable400,000

Question

Research Case 7-9 (Static) Locate and extract relevant information and authoritative support for afinancial reporting issue; financing with receivables [LO7-8]You are spending the summer working for a local wholesale furniture company, Samson Furniture, Inc. The company is considering aproposal from a local financial institution, Old Reliant Financial, to factor Samson's receivables. The company controller is unfamiliarwith the prevailing GAAP that deals with accounting for the transfer of financial assets and has asked you to do some research. Thecontroller wants to make sure the arrangement with the financial institution is structured in such a way as to allow the factoring to beaccounted for as a sale.Old Reliant has offered to factor all of the company's receivables on a &#34;without recourse&#34; basis. Old Reliant will remit to Samson 90%of the factored amount, collect the receivables from Samson's customers, and retain the remaining 10% until all of the receivables havebeen collected. When Old Reliant collects all of the receivables, it will remit to Samson the retained amount, less a 4% fee (4% of thetotal factored amount).Required:1. Access the relevant authoritative literature on accounting for the transfer of financial assets using the FASB Accounting StandardsCodification. You might gain access at the FASB website (www.fasb.org), from your school library, or some other source. This sourcewill specify what conditions must be met for a transfer of receivables to be accounted for as a sale (or in accounting terms,&#34;derecognized&#34;).2. Assuming that the conditions for treatment as a sale are met, prepare Samson's journal entry to record the factoring of $400,000 ofreceivables. Assume that the fair value of the last 10% of Samson's receivables is equal to $25,000.3-a. An agreement that both entitles and obligates the transferor, Samson, to repurchase or redeem transferred assets from thetransferee, Old Reliant, maintains the transferor's effective control over those assets and the transfer is accounted for as a securedborrowing, not a sale, if and only if what conditions are met?3-b. What is the specific Codification citation that Samson would rely on in applying that accounting treatment? WIII speciTY wnat conaitions must pe met Tor a transter of receivapies to pe accountea for as a saie (or in accounting termS,&#34;derecognized&#34;).2. Assuming that the conditions for treatment as a sale are met, prepare Samson's journal entry to record the factoring of $400,000 ofreceivables. Assume that the fair value of the last 10% of Samson's receivables is equal to $25,000.3-a. An agreement that both entitles and obligates the transferor, Samson, to repurchase or redeem transferred assets from thetransferee, Old Reliant, maintains the transferor's effective control over those assets and the transfer is accounted for as a securedborrowing, not a sale, if and only if what conditions are met?3-b. What is the specific Codification citation that Samson would rely on in applying that accounting treatment?X Answer is not complete.Complete this question by entering your answers in the tabs below.Req 1Req 2Req 3AReq 3BAssuming that the conditions for treatment as a sale are met, prepare Samson's journal entry to record the factoring of$400,000 of receivables. Assume that the fair value of the last 10% of Samson's receivables is equal to $25,000. (If noentry is required for a transaction/event, select &#34;No journal entry required&#34; in the first account field.)NoTransactionAccount TitleDebitCredit1Cash400,000 XLoss on sale of receivables25,000 XReceivable from factor7,000Accounts receivable400,000< Req 1Req 3A >

Accepted Answer

Journal entries refer to the recording of all the monetary events occurring in a particular…

2. Assuming that the conditions for treatment as a sale are met, prepare Samson's journal entry to record the factoring of $400,000 of receivables. Assume that the fair value of the last 10% of Samson's receivables is equal to $25,000.