Answer Happy

The controller for Culver Corporation has reached an agreement with Pronghorn Financing Ltd. to sell a large portion of Culver's past- due accounts receivable. Culver agrees to sell $1,850,000 of accounts receivable to Pronghorn without recourse. Culver's controller estimates that the fair value of Culver's liability to pay Pronghorn for uncollectible accounts is $166,000. Pronghorn will charge Culver 9% of the total receivables balance as a financing fee, and will withhold an initial amount of 10%. Calculate the net proceeds and the gain or loss on the disposal of receivables to Pronghorn Financing Ltd. Net proceeds on disposal of receivables $ Account Titles and Explanation $ Prepare the journal entry on the books of Culver Corporation to record the disposal of receivables to Pronghorn Financing Ltd. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Debit Credit