Reference no: EM132469986
Question 1 - Mountain High Ice Cream Company transferred $68,000 of accounts receivable to the Prudential Bank. The transfer was made without recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10%. When the bank collects the receivables, it will remit to Mountain High the retained amount (which Mountain estimates has a fair value of $5,800) less a 2% fee (2% of the total factored amount).
Required - Prepare the journal entry to record the transfer on the books of Mountain High assuming that the sale criteria are met. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Question 2 - Mountain High Ice Cream Company transferred $68,000 of accounts receivable to the Prudential Bank. The transfer was made without recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10%. When the bank collects the receivables, it will remit to Mountain High the retained amount (which Mountain estimates has a fair value of $5,800) less a 2% fee (2% of the total factored amount).
Required - Prepare the journal entry to record the transfer on the books of Mountain High assuming that the sale criteria are met. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Question 3 - Harrison Company maintains a checking account at the First National City Bank. The bank provides a bank statement along with canceled checks on the last day of each month. The July 2018 bank statement included the following information:
Balance, July 1, 2018 $55,928
Deposits 179,700
Checks processed (192,810)
Service charges (40)
NSF checks (1,300)
Monthly loan payment deducted directly by bank from account (includes $320 in interest) (3,420)
Balance, July 31, 2018 $38,058
The company's general ledger account had a balance of $39,258 at the end of July. Deposits outstanding totaled $6,500 and all checks written by the company were processed by the bank except for those totaling $8,440. In addition, a $2,200 July deposit from a credit customer was recorded as a $220 debit to cash and credit to accounts receivable, and a check correctly recorded by the company as a $40 disbursement was incorrectly processed by the bank as a $400 disbursement.
Required -
1. Prepare a bank reconciliation for the month of July.
2. Prepare the necessary journal entries at the end of July to adjust the general ledger cash account.