Dec. 1 Accounts receivable of $160,000 are transferred. 11 A sales return of $1,000 on a transferred account is made. 31 Collections are made on $86,000 of the transferred accounts receivable plus interest for the month of December. This amount is remitted to Murphy.
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Transferring Accounts Receivable White Corporation has entered into an agreement to transfer accounts receivable to Murphy Company.
Under the terms of this agreement. 'White receives 80% of the value of all the transferred accounts receivable (to reflect credit risk) and is charged a 1% service charge,which is based upon the dollar amount of transferred receivables.Interest is charged at an annual interest rate of 12% of any outstanding loan balance.The transferred receivables will continue to be collected by \l\lhite with any cash flows being remitted to Murphy at the end of each month. White is not allowed to transfer the receivables to anyone else. White normally transfers its accounts receivable. The following selected 2019 transactions relate to this agreement
Required:
- Assume that White uses U.S.GAAP.
- Prepare
journal entries on \l\lhite'sbooks to record the preceding tran - How would this agreement be reported on White's December 31,2019,balance sheet (assume the note payable is short term)?
- Prepare
- Assume that White uses IFRS:
- Prepare journal entries on \l\lhite'sbooks to record the preceding tran
- How would this agreement be reported on White's December 31,2019,balance sheet (assume the note payable
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