Jervis sells $75,000 of its accounts receivable to Northern Bank in order to obtain necessary cash. Northern Bank charges a 5% f
actoring fee. What entry should Jervis make to record the transaction?
1 answer:
Answer:
Debit cash by $71,250, factoring expense by $3,750 and credit account receivable by $75,000.
Explanation:
Step 1 of 2
Calculate the amount of factoring fee.
Factoring fee = 5% ×Account Receivable
=5%×$75,000
=$3,750
Step 2 of 2. Journey record. Image attached.
Debit cash by $71,250, factoring expense by $3,750 and credit account receivable by $75,000.
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Tell me if this helps by marking the answer, thank you!!