White Corporation has entered into an agreement to transfer accounts receivable to Murphy Company. Under the terms of this agreement, White receives 80% of the value of all the transferred accounts receivable (to reflect credit risk) and is charged a 1% service charge, which is based upon the dollar amount of transferred receivables. Interest is charged at an annual interest rate of 12% of any outstanding loan balance. The transferred receivables will continue to be collected by White with any cash flows being remitted to Murphy at the end of each month. White is not allowed to transfer the receivables to anyone else. White normally transfers its accounts receivable. The following selected 2019 transactions relate to this agreement:

Dec 1	Accounts receivable of $160,000 are transferred.
11	A sales return of $1,000 on a transferred account is made.
31	Collections are made on $80,000 of the transferred accounts receivable plus interest for the month of December. This amount is remitted to Murphy.

Required:

1.

Assume that White uses U.S. GAAP.

A.	Prepare journal entries on Whites books to record the preceding transactions.
B.	How would this agreement be reported on Whites December 31, 2019, balance sheet (assume the note payable is short-term)?

2.

Assume that White uses IFRS:

A.	Prepare journal entries on Whites books to record the preceding transactions.
B.	How would this agreement be reported on Whites December 31, 2019, balance sheet (assume the note payable is short-term)?

General Journal

Shaded cells have feedback.

General Journal Instructions

Assuming White uses U.S. GAAP, prepare journal entries on Whites books to record the transactions.

How does grading work?

PAGE 9

GENERAL JOURNAL

Score: 146/150

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1	Dec 1	Cash		126400
2		Assignment Service Charge Expense		1600
3		Notes Payable			128000
4	dec 1	accounts receivable assigned		160000
5		Accounts Receivable			160000
6	Dec 11	Return Liability		1000
7		Accounts Receivable Assigned			1000
8	Dec 31	Cash		80000
9		Accounts Receivable Assigned			80000
10	Dec 31	Notes Payable		80000
11		Interest Payable		9600
12		Cash			89600

Points:

28.23 / 29

Assuming White uses IFRS, prepare journal entries on Whites books to record the transactions.

All transactions on this page must be entered (except for post ref(s)) before you will receive Check My Work feedback.

PAGE 9

GENERAL JOURNAL

Score: 66/125

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1	Dec 1	Cash		126400
2		Receivable from Factor		32,000
3				1,600
4		Accounts Receivable			160000
5	Dec 11	Return Liability		1000
6		Receivable from Factor			1000
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I need help with the "interest expense" and "cash" on the last entry of the GAAP entries and the last 4 lines of entries under the IFRS.