Answer:
The journal entries are as follows:
In the books of Whispering:
Cash A/c Dr. $151,708
Due from Metlock Ac Dr. $9,894
Loss on sale of receivable A/c Dr. $3,298
To Accounts receivable $164,900
(To record factoring of accounts receivable on without recourse)
Working notes:
Due from Metlock = $164,900 × 6%
= $9,894
Loss on sale of receivable:
= $164,900 × 2%
= $3,298
In the books of Metlock Factors:
Accounts receivable A/c Dr. $164,900
To Due to Whispering $9,894
To Financing revenue $3,298
To Cash $151,708
(To record the accounts receivable)
