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The controller for Swifty Corporation has reached an agreement with Blue Spruce Financing Ltd. to sell a large portion of Swifty's past-due accounts receivable. Swifty
The controller for Swifty Corporation has reached an agreement with Blue Spruce Financing Ltd. to sell a large portion of Swifty's past-due accounts receivable. Swifty agrees to sell $1,980,000 of accounts receivable to Blue Spruce with recourse. Swifty's controller estimates that the fair value of Swifty's liability to pay Blue Spruce for uncollectible accounts is $180,000. Blue Spruce will charge Swifty 7% of the total receivables balance as a financing fee, and will withhold an initial amount of 8%. (a) Calculate the net proceeds and the gain or loss on the disposal of receivables to Blue Spruce Financing Ltd. Net proceeds $ on disposal of receivables $ Prepare the journal entry on the books of Swifty Corporation to record the sale of receivables to Blue Spruce Financing Ltd. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. List all debit entries before credit entries.)
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