Question
Exercise 7-18 Riverbed Corporation factors $266,800of accounts receivable with Kathleen Battle Financing, Inc. on a with recourse basis. Kathleen Battle Financing will collect the receivables.
Exercise 7-18
Riverbed Corporation factors $266,800of accounts receivable with Kathleen Battle Financing, Inc. on a with recourse basis. Kathleen Battle Financing will collect the receivables. The receivables records are transferred to Kathleen Battle Financing on August 15, 2017. Kathleen Battle Financing assesses a finance charge of2% of the amount of accounts receivable and also reserves an amount equal to4% of accounts receivable to cover probable adjustments.
(b)Assume that the conditions are met for the transfer of receivables with recourse to be accounted for as a sale. Prepare the journal entry on August 15, 2017, for Riverbed to record the sale of receivables, assuming the recourse liability has a fair value of $3,700.
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Accounting Principles
Authors: Paul D Kimmel, Donald E Kieso Jerry J Weygandt
IFRS global edition
1-119-41959-4, 470534796, 9780470534793, 9781119419594 , 978-1119419617
