In 2017, Grouper Corp. required additional cash for its business. Management decided to use accounts receivable to raise the additional cash and has asked you to determine the income statement effects of the following transactions:
1.On July 1, 2017, Grouper assigned $516,000 of accounts receivable to Provincial Finance Corporation as security for a loan. Grouper received an advance from Provincial Finance of 90% of the assigned accounts receivable less a commission of 3% on the advance. Before December 31, 2017, Grouper collected $189,000 on the assigned accounts receivable, and remitted $200,140 to Provincial Finance. Of the latter amount, $11,140 was interest on the advance from Provincial Finance.2.On December 1, 2017, Grouper sold $258,000 of accounts receivable to Sheffield Corp. for $237,000. The receivables were sold outright on a without recourse basis and Grouper has no continuing interest in the receivables.3.On December 31, 2017, an advance of $103,000 was received from First Bank by pledging $138,000 of Grouper’s accounts receivable. Grouper’s first payment to First Bank is due on January 30, 2018.
(a)
Show the income statement effects of these transactions for the year ended December 31, 2017.
Grouper Corp.
INCOME STATEMENT EFFECT
For the year ended December 31, 2017Expenses resulting from accounts receivable assigned$
Loss resulting from accounts receivable sold
Total expenses$
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