Question

jervis sells 3400 of its accounts receivable to northern bank in order to obtain necessary cash northern bank charges a 2% factoring fee what entry should jervis make to record the transaction

Answer 1

Answer:

Factoring fee = 2% * Account Receivable

= 2% * $3,400

= $68

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Date  Account Titles and Explanation     Debit    Credit

          Cash                                                   $3,332

          Factoring expenses                           $68

                    Account receivables                             $3,400

          (To record the receipt of cash against the receivables)