Question

A company factored $45,000 of its accounts receivable and was charged a 3% factoring fee. The journal entry to record this transaction would include a: A. Debit to Cash of $45,000, a debit to Factoring Fee Expense of $1,350, and credit to Accounts Receivable of $43,650. B. Debit to Cash of $45,000 and a credit to Accounts Receivable of $45,000. C. Debit to Cash of $43,650, a debit to Factoring Fee Expense of $1,350, and a credit to Accounts Receivable of $45,000. D. Debit to Cash of $46,350 and a credit to Accounts Receivable of $46,350. E. Debit to Cash of $45,000 and a credit to Notes Payable of $45,000.

Answer 1

Answer:

C. Debit to Cash of $43,650, a Debit to Factoring Fee Expense of $1,350, and Credit to Account Receivable of $45,000

Explanation:

Assuming the company factored the amount of $45,000 of its ACCOUNTS RECEIVABLE and was charged a 3% FACTORING FEE. The appropriate journal entry to record this transaction would include a:Debit to Cash of $43,650, a Debit to Factoring Fee Expense of $1,350, and Credit to Account Receivable of $45,000

Debit Cash $43,650

(97*$45,000)

Debit Factoring Fee Expense of $1,350

($3%*45,000)

Credit Account Receivable $45,000