Asked by Hallie Adair on Jun 06, 2024
Verified
What entry format is appropriate if sales returns and allowances occur on factored accounts?
A)
Sales Returns and Allowances XX Receivable from Factor XX\begin{array}{cc}\text { Sales Returns and Allowances } & \mathrm{XX} \\\text { Receivable from Factor } & \mathrm{XX}\end{array} Sales Returns and Allowances Receivable from Factor XXXX
B)
Receivable from Factor XX Factoring Expense XX \begin{array}{cc}\text { Receivable from Factor } & \text { XX } \\\text { Factoring Expense } & \text { XX }\end{array} Receivable from Factor Factoring Expense XX XX
C)
Sales Returns and Allowances XX Factoring Expense XX\begin{array}{lc}\text { Sales Returns and Allowances } & \mathrm{XX} \\\text { Factoring Expense } & \mathrm{XX}\end{array} Sales Returns and Allowances Factoring Expense XXXX
D)
Receivable from Factor XX Accounts Receivable XX \begin{array}{cc}\text { Receivable from Factor } & \text { XX } \\\text { Accounts Receivable } & \text { XX }\end{array} Receivable from Factor Accounts Receivable XX XX
Sales Returns
Transactions where customers return previously purchased merchandise, leading to a reduction in sales revenue.
Receivable from Factor
Funds to be received from a factor, a financial intermediary that purchases receivables from a company, providing it with immediate cash.
Factoring Expense
Costs associated with the process of selling accounts receivable to a third party to obtain immediate cash.
- Comprehend the accounting for sales of accounts receivable, including factoring and assignment, and its impact on financial statements.
Verified Answer
Learning Objectives
- Comprehend the accounting for sales of accounts receivable, including factoring and assignment, and its impact on financial statements.
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