On 1 April 20X5, XCourt Company transferred $ 75,000 of accounts receivable to Prima Finance Company to

Question:

On 1 April 20X5, XCourt Company transferred $ 75,000 of to Prima Finance Company to obtain immediate cash. Consider the two following independent circumstances.

Required:
1. The transfer agreement specified a price of $ 64,200 on a no-recourse, notification basis that effectively transferred legal control to Prima. Prima is permitted to resell the accounts receivables without permission from XCourt. Give the entry/ entries that XCourt Company should make. The $ 10,800 reduction from represents a $ 6,800 financing fee and $ 4,000 of expected bad debts that are already in the allowance for doubtful accounts. Explain the basis for your response.
2. The transfer agreement specified a price of $ 70,000 on a with- recourse, notification basis. The $ 5,000 reduction from is related to expected bad debts, $ 2,000, and a $ 3,000 financing fee. he bad debt amount is already in the allowance for doubtful accounts. XCourt retained the right to repurchase the receivables; Prima is not permitted to resell the unless XCourt is given first refusal on the transaction. Give the entry/ entries that XCourt should make.
3. Explain the difference to the statement of financial position between requirements 1 and Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that... Face Value
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