Gringo Corporation factors $250,000 of accounts receivable with Winkler Financing, Inc. on a with recourse basis. Winkler Financing will collect the receivables. The receivables records are transferred to Winkler Financing on August 15, 20X1. Winkler Financing assesses a finance charge of 2% of the amount of accounts receivable and also reserves an amount equal to 4% 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, 20X1, for Gringo to record the sale of receivables, assuming the recourse obligation has a fair value of $3,000.
ACCT 3220 Summer 2013 Group Exercise #2 PART I ? ?Presented below is information related to Sanford Corp. ? ?? ?? ? ? ?? ? ? ? July 1?Sanford Corp. sold to Legler Co. merchandise having a sales price of $10,000 with terms 2/10, net/60. Sanford records its sales and receivables net.?? ? 5?Accounts receivable of $12,000 (gross) are factored with Rothchild Credit Corp. without recourse at a financing charge of 9%. Cash is received for the proceeds; collections are handled by the finance company. (These accounts were all past the discount period.)?? ? Dec. 29?Legler Co. notifies Sanford that it is bankrupt and will pay only 10% of its account. Give the entry to write off the uncollectible balance using the allowance method. (Note: First record the increase in the receivable on July 11 when the discount period passed.)?? ?? ?? ? ?? ?? ? ?? ??? ?? ? ??? ? Instructions: Prepare all necessary entries in general journal form for Sanford Corp.?? PART II ? ?Gringo Corporation factors $250,000 of accounts receivable with Winkler Financing, Inc. on a with recourse basis. Winkler Financing will collect the receivables. The receivables records are transferred to Winkler Financing on August 15, 20X1. Winkler Financing assesses a finance charge of 2% of the amount of accounts receivable and also reserves an amount equal to 4% 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, 20X1, for Gringo to record the sale of receivables, assuming the recourse obligation has a fair value of $3,000.?? ?? ?? PART III ? ?Inventory information for Part 311 of Seminole Corp. discloses the following information for the month of June. ? ?? ?? ? ? ?? ? ? ? June 1?Balance?300 units @ $10?June 10?Sold?200 units @ $24?? ? 11?Purchased?800 units @…
Attachments:
3220 OLI SUM ….rtf