A business has a $6,000 account receivable that has already been properly recorded. On July 15, the...
- A business has a $6,000 account receivable that has already been properly recorded. On July 15, the business sells the receivable to a bank that applies a 4% factoring fee. Prepare any necessary journal entries on July 15 to sell the receivable.
Homework Answers
Answer
--The journal entry to record sale of receivables would be:
| Account Titles and Explanation | Debit | Credit | |
| 15-Jul | Cash [$ 6000 - 4%] | $5,760 | 0 |
| Service charge Expense [$6000 x 4%] | $240 | 0 | |
| Accounts receivables | 0 | $6,000 |
--Note: If 'service charge expense' account tile is incorrect, please provide a list of accounts to be chose from.
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