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Sagot :
Answer:
Debit Cash for $68,730; Debit Receivable from factor for $6,900; Debit Loss on sale of receivables for $3,370; and Credit Accounts receivable $79,000.
Explanation:
Factored amount = $79,000
Cash = Factored amount * (100% - Percentage of he factored amount retained - Rate of fee = $79,000 * (100% - 10% - 3%) = $68,730
Receivable from factor = $6,900
Loss on sale of receivables = Factored amount - Cash - Receivable from factor = $79,000 - $68,730 - $6,900 = $3,370
The journal entry will therefore look as follows:
Details Debit ($) Credit ($)
Cash 68,730
Receivable from factor 6,900
Loss on sale of receivables 3,370
Accounts receivable 79,000
(To record factoring of accounts receivable.)
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