Question

On March 3, Splish Brothers Inc. sells $666,900 of its receivables to National Factors Inc. National Factors Inc. assesses a service charge of its receivables to Western Factors Inc. Western Factors Inc. assesses a service charge of 5% of the amount of receivables sold. Prepare the entry on Sheridan Company books to record the sale of the receivables.

Answer 1

Answer:

cash                  633,555 debit

loss on factoring 33,345 debit

           accounts receivable   666,900 credit

--to record sales of receivables--

Explanation:

666,900 x 5% fee = 33,345‬ factoring expense

666,900 - 33,345 = 633,555‬ cash proceeds

we will write-off the erceivable sold.

We will increase our cash and recognize the loss on the factoring