{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}


Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: eceivable. Disposition of Accounts and Notes Receivable Disposition of Accounts and Notes Receivable Company may transfer A/R or N/R to another company for cash because of: Competition (must sell products on credit, but may not be good at the collections game). Billing/collection are time­consuming and costly processes. Need for cash ­ money is tight or poor cash management practices employed. Transfer accomplished by: 1. Secured borrowing (PLEDGING) 2. Sale of receivables (FACTORING) Chapter 7-53 LO 8 Explain accounting issues related to disposition LO of accounts and notes receivable. of Secured Borrowing (PLEDGING) Secured Borrowing ((PLEDGING) PLEDGING) Secured Secured (PLEDGING) EASY STUFF!!! 1. Setup N/P and pay all “upfront” fees at start. 2. Collect own A/R and remit ALL $$$ collected N/P AND interest are paid off. until both Illustration: March 1, 2010, Howat, Inc. provides (or assigns) $700,000 of its A/R to Citizens Bank as collateral for a $500,000 note. Howat continues to collect the A/R and the debtors are NOT notified of...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online