Answer:
Cash 135,604 debit
Due from factor account: 7,735 debit
Loss on Factoring 18,081 debit
Recourse Liability 6,720 credit
Accounts Receivable 154,700 credit
--to record sales of account receivables--
Explanation:
fee: 154,700 x 3% = 4,641
retention: 154,700 x 5% = 7,735
recourse: 6,720
The company will receive cash for the difference between his account receivable and the discount above:
154,700 - 4,641 - 7,735 - 6,720 = 135.604
We post the retention as an assets as latter we will recove this amount.
Then, the recourse as a liaiblity. Write-off the receivables and later, the cash receipts.
The difference will be considered a loss.
