Rick's Retailer needs immediate cash to pay salaries and purchase additional merchandises. It decided to sell...
| Rick's Retailer needs immediate cash to pay salaries and purchase additional merchandises. | |||||||||
| It decided to sell an Accounts Receivable balance for $150,000 to Joe Factor. Joe Factor will charge a | |||||||||
| service fee of 5%. Please prepare the Journal entry to record the cash Rick Retailer will receive | |||||||||
| from Joe Factor. | |||||||||
Homework Answers
Journal
|
Account Title and Explanation |
Debit |
Credit |
| Cash | 142,500 | |
| Factoring expense | 7,500 | |
| Accounts receivable | 150,000 |
Accounts receivable = $150,000
Service fee = 5%
Factoring expense = Accounts receivable x Service fee
= 150,000 x 5%
= $7,500
Add Answer to:
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