Answer:
Dr Cash $59,840
Dr Loss on Sale of Receivables $8,160
Dr Recievable from Factor $5,800
Cr Recourse liability $5,800
Cr Accounts Receivable $68,000
Explanation:
Preparation of the journal entry to record the transfer on the books of Mountain High assuming that the sale criteria are met.
Dr Cash $59,840
[(68,000 x .90) - (68,000 x .02)]
Dr Loss on Sale of Receivables $8,160
[(5,800 + 68,000) - ($59,840 + 5,800)]
Dr Recievable from Factor $5,800
Cr Recourse liability $5,800
($59,840+$8,160+5800-68,000)
Cr Accounts Receivable $68,000
(To record the transfer on the books of Mountain High)
Dr Loss on Sale of Rec = (5,800 + 68,000) - ($59,840 + 5,800) = $8,160
73,800-65650
