USA Sales with Repurchase Agreement

[Anaya]

I am in my intermediate accounting class and we went over the sales with repurchase agreement. I was a bit confused on the reading, and the book does not do a very good job on explaining the concept or showing how to journalize for this type of sale. I am wondering if anyone can help me with this. Thanks in advance.

 

[kirby]

Those kind of arrangements are covered by FASB 49. FASB 49 says to treat this as a financing and not a sale. So initial entry is:
Dr Cash
Cr Loan Payable