Question
Hum Corp. has accounts receivable of $510,000. The company transfers these accounts receivable to a financial institution. There are no bad debts associated with these
Hum Corp. has accounts receivable of $510,000. The company transfers these accounts receivable to a financial institution. There are no bad debts associated with these accounts receivable. Proceeds of $477,000 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 $510,000 to Hum on schedule, and the cash remittance is forwarded to the financial institution.
Required: Record all journal entries for the sequence of events in the books of Hum Corp. assuming the transfer is recorded as a sale/derecognition of receivables. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 1. Record the sale/derecognition of receivables.
2. Record the on payment by the customer and payment to the finance company.
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