A7-12 and A7-13 please.

2. Prepare the journal entry to record the transfer as (a) a sale/derecognition and (b) a borrowing. 3. Recalculate the current ratio reflecting first (a) and then (b) in requirement 2. 4. Why might a financial statement analyst restore transferred accounts receivable to the statement of financial position before performing a ratio analysis? What ratios other than the current ratio would be especially affected? A7-12 Transfer of Accounts Receivable: The following two cases are independent: Case A Appa Apparel manufactures fine sportswear for many national retailers and frequently sells its receivables to financing companies as a means of accelerating cash collections. Appa transferred $600,000 of receivables from retailers to a financing company and has no control over, or continuing interest in the accounts receivable. The receivables were transferred without recourse a notification basis. The financing company charged 12% of the receivables total. There were no bad debts. transferred legal control to Prima. Prima is permitted to resell the accounts receivables without permisste 46 Chaptricial As Cash and Receivable Required: 2. Record all entries related to the transfer for Appa 1. Should Appa record the transfer of receivables as a sale/derecognition or as a borrowing? Why? Case B Bappa Apparel manufactures fine sportswear for many national retailers and frequently sells its receive from retailers to a financing company. The receivables were transferred with recourse on a notification basis. The to financing companies as a means of accelerating cash collections. Bappa transferred $600,000 of recewa of a retailer in the event of a default. However, Bappa retains legal control over the receivables, and the face financing company charged 84. Bappa has no obligation to the financing company other than to pay the On 1 April 20X5, XCourt Company transferred $75,000 of accounts receivable to Prima Finance Company 1. The transfer agreement specified a price of $64,200 on a no-recourse, notification basis that eitectes obtain immediate cash. Consider the two following independent circumstances. Required: company may not sell the accounts receivable to a third party. There were no bad debts. Required: Should Bappa record the transfer of receivables as a sale/derecognition or as a borrowing? Why? 2. Record Bappa's entries related to the transfer. * A7-13 Transfer of Accounts Receivable: from XCourt. Give the entry/entries that court should make. The $10,800 reduction from facevalne represents a $6,800 financing fee and S4,000 of expected bad debts that are already in the allowances 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 55.000 reduction from face value is related to expected bad debts, $2,000, and a $3,000 financing fee. The 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 accounts receivable 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 2. * A7-14 Transfer of Accounts Receivable: Lincraft Corp. reports a current ratio of 3-to-1 in its 20X2 financial statements. The statement of financial position shows current assets of $3,116,500 and current liabilities of $1,040,100. Lincraft has accounts receivable of $1,267,300. The company transfers $970,000 of these accounts receivable to a financial institution. There are $33,600 of bad debts associated with these accounts receivable, an amount that is already in the allowance for doubtful accounts. Proceeds of $889,450 are received from the transfer. The transfer is on a non-notification bases which means that the customers pay Lincraft and Lincraft then remit the cash to the financial institution. The customers pay $936,400 to Lincraft on schedule, 33,600 is written off to the allowance at the appropriate time and the cash remittance is forwarded to the financial institution. Required: 1. Record all journal entries for the sequence of events assuming: a. The transfer is recorded as a sale/derecognition, and