Question

Trell Corporation transferred $50,000 of accounts receivable to a local bank. The transfer was made without recourse. The local bank remits 80% of the factored amount to Trell and retains the remaining 20%. When the bank collects the receivables, it will remit to Trell the retained amount less a fee equal to 3% of the total amount factored. Trell estimates a fair value of its 20% interest in the receivables of $8,000 (not including the 3% fee). Trell will show an amount receivable from factor of:

Answer 1

Answer:

$6500

Explanation:

Fair value of its 20% interest in the receivables = 8000  

Less: Factoring fee= 1500 =50000*3%

Amount receivable from factor= 6500