Question
Hum Corp. has accounts receivable of $460,000. The company transfers these accounts receivable to a financial institution. There are no bad debts associated with these
Hum Corp. has accounts receivable of $460,000. The company transfers these accounts receivable to a financial institution. There are no bad debts associated with these accounts receivable. Proceeds of $444,500 are received from the transfer. The transfer is on a non-notification basis, which means that the customers pay Hum, and Hum remits the cash to the financial institution. The customers pay $460,000 to Hum on schedule, and the cash remittance is forwarded to the financial institution.
Required:
Record all journal entries for the sequence of events assuming the transfer is recorded as a sale/derecognition of receivables.
Record all journal entries for the sequence of events assuming the transfer is recorded as a borrowing.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started