Answer:
Cash 66,880 debit
Due from factor 7,600 debit
Loss on factoring 6,120 debit
Accounts Receivables 76,000 credit
Recourse Liability 4,600 credit
Explanation:
Accounts receivable factored: 76,000
Cash received 90% of 76,000 = 68,400
less <em>bank charge fee:</em> 76,000 x 2% =<u> 1,520 </u>
total: 66,880
Due from factoring = 76,000 x 10% 7,600
Recourse liability: 4600
<em>The loss is calcualte bu difference:</em>
The bank receives 76,000 dollars of Accounts receivables
It pays 66,880 It makes us assuma liability for 4,600
and potentially can paid up to 7,600
Net: 69,880
difference: 76,000 - 66,880 = 6,120