Bohannon SA factors 250,000 of accounts receivable with Winkler Financing, Inc. on a without guarantee (no recourse)

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Bohannon SA factors €250,000 of accounts receivable with Winkler Financing, Inc. on a without guarantee (no recourse) basis. Winkler Financing will collect the receivables. The receivables records are transferred to Winkler Financing on August 15, 2019. 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 guarantee to be accounted for as a sale?
b. Assume the conditions from part (a) are met. Prepare the journal entry on August 15, 2019, for Bohannon to record the sale of receivables.
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Related Book For  book-img-for-question

Intermediate Accounting IFRS

ISBN: 978-1119372936

3rd edition

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield

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