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 $$86,000$ 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 White$$s books to record the preceding transactions.

B$.$ How would this agreement be reported on White$$s December $31,2019,$ balance sheet $($assume the note payable is short$-$term$)?$

$2.$ Assume that White uses IFRS:

A$.$ Prepare journal entries on White$$s books to record the preceding transactions.

B$.$ How would this agreement be reported on White$$s December $31,2019,$ balance sheet $($assume the note payable is short$-$term$)?$Assuming White uses U$.$S$.$ GAAP, prepare journal entries on White$$s books to record the transactions.

PAGE $9$

GENERAL JOURNAL

DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT

Dec. $31$

Cash

$81,280\mathrm{.}00$

Assignment Service Charge Expense

$1,280\mathrm{.}00$

Notes Payable

$80,000\mathrm{.}00$

Dec. $1$

Accounts Receivable Assigned

Accounts Receivable

Dec. $11$

Return Liability

Accounts Receivable Assigned

Dec. $31$

Cash

Accounts Receivable Assigned

Dec. $31$

Notes Payable

Interest Expense

Cash

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

PAGE $9$

GENERAL JOURNAL

DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT

Dec. $1$

Cash

$126,400\mathrm{.}00$

Factoring Expense

$1,600\mathrm{.}00$

Receivable from Factor

$32,000\mathrm{.}00$

Accounts Receivable

$160,000\mathrm{.}00$

Dec. $11$

Return Liability

$1,000\mathrm{.}00$

Receivable from Factor

$1,000\mathrm{.}00$

Dec. $31$

Cash

$90,000\mathrm{.}00$

Payable to Factor

$90,000\mathrm{.}00$

Dec. $31$

Payable to Factor

$90,000\mathrm{.}00$

Cash

$90,000\mathrm{.}00$