Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On December 1, 2021, Snow Unlimited Resorts, Inc. factored $465,000 of accounts receivable with Fast Eddies Overnight Finance on a without recourse basis. Under the

On December 1, 2021, Snow Unlimited Resorts, Inc. factored $465,000 of accounts receivable with Fast Eddies Overnight Finance on a without recourse basis. Under the arrangement, Snow Unlimited was to handle any issues concerning disputed billings. Fast Eddie was to make the collections, and absorb any credit losses for uncollectible accounts. Fast Eddie assessed a finance charge of 8.00% of the total accounts receivable factored and retained an amount equal to 12% of the total receivables to cover any disputed billings. Instructions

(a) Prepare the journal entry required on the books of Snow Unlimited Resorts for the December 1, 2021 transaction.

(b) Prepare the journal entry required on the books of Fast Eddies Overnight Finance for the December 1, 2021 transaction. (c) Assume Snow Unlimited Resorts, Inc. had factored the $465,000 of accounts receivable with Fast Eddies Overnight Finance on a with recourse basis instead. The recourse provision has a fair value of $15,000. Prepare the journal entry required on the books of Snow Unlimited Resorts for the December 1, 2021 transaction with recourse. (d) Prepare the entry on Snow Unlimited Resorts, Inc. books if a client disputed a billing and was given a credit adjustment on their account in the amount of $3,500. (e) Prepare the entry on Fast Eddies books after being notified of the credit adjustment. Note: the account was included in the total accounts factored with Fast Eddies Overnight Finance and was still outstanding (unpaid) at the time of the credit adjustment.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial And Managerial Accounting

Authors: Carl S. Warren, Jefferson P. Jones, William B. Tayler

15th Edition

1337902667, 9781337902663

More Books

Students also viewed these Accounting questions

Question

Am I expecting too much from other people?

Answered: 1 week ago

Question

Understand how people development is used to retain talent.

Answered: 1 week ago