Exercise $7-24($Algo$)$ Factoring of accounts receivable without recourse $[$LO$7-8]$

Mountain High Ice Cream Company transferred $$77,000$ of accounts receivable to the Prudential Bank. The transfer was made

without recourse. Prudential remits $90\%$ of the factored amount to Mountain High and retains $10\%.$ When the bank collects the

receivables, it will remit to Mountain High the retained amount $($which Mountain estimates has a fair value of $$6,700)$ less a $3\%$ fee

$(3\%$ of the total factored amount$).$

Required:

Prepare the journal entry to record the transfer on the books of Mountain High assuming that the sale criteria are met.

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field.

Journal entry worksheet

$1$

Record the transfer of accounts receivable.

Note: Enter debits before credits.