Asked by Camila Almeida on Jun 14, 2024
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A company factored $30,000 of its accounts receivable and was charged a 2% factoring fee.The journal entry to record this transaction would include a debit to Cash of $30,000,a debit to Factoring Fee Expense of $600,and credit to Accounts Receivable of $30,600.
Factoring Fee
A charge assessed by a factoring company for providing cash advances to businesses by purchasing their accounts receivable at a discount.
Accounts Receivable
Outstanding payments due to a firm from its clients for delivered services or products yet to be settled.
Factoring
A financial transaction where a business sells its accounts receivable to a third party at a discount in exchange for immediate cash.
- Know how to record and handle transactions involving accounts receivable, including factoring, credit sales, and the use of promissory notes.
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Learning Objectives
- Know how to record and handle transactions involving accounts receivable, including factoring, credit sales, and the use of promissory notes.
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