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Using IFRS And the given labels below please explain what the right numbers for debits and credits

should be and your calculations.


Screen Shot 2019-10-14 at 7.20.54 PM.png

Screen Shot 2019-10-14 at 7.20.54 PM.png

5
Mountain High Ice Cream Company reports under IFRS. Mountain High transferred $60,000 of accounts receivable to the Prudential
Bank. The transfer was made with recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10% to cover
sales returns and allowances. When the bank collects the receivables, It will remit to Mountain High the retained amount (which
Mountain estimates has a fair value of $5,000). Mountain High anticipates a $3,000 recourse obligation. The bank charges a 2% fee
(2% of $60,000), and requires that amount to be paid at the start of the factoring arrangement. Mountain High has transferred control
11.17/16.66
over the receivables, but determines that it still retains substantially all risks and rewards associated with them.
points awarded
Required:
Scored
Prepare the journal entry to record the transfer on the books of Mountain High, considering whether the sale criteria under IFRS have
been met. (If no entry is required for a transaction/event, select "No Journal entry required" In the first account field.)
No
Event
General Journal
Debit
Credit
ebook
1
1
Cash
52,800
Finance charge expense
10,200 x
Liability-financing arrangement
63,000 X
Print
References

Top Answer

Cash (debit) 52,800 Due from factor (debit) 6,000 ; 10% x 60,000 Loss... View the full answer

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