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17 May, 17:27

A company factored $30,000 of its accounts receivable and was charged a 2% factoring fee. The journal entry to record this transaction would include a debit to Cash of $30,000, a debit to Factoring Fee Expense of $600, and credit to Accounts Receivable of $30,600.

a. True

b. False

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Answers (1)
  1. 17 May, 17:41
    0
    False

    Explanation:

    Given that,

    Accounts receivable = $30,000

    Factoring fee charged = 2%

    Therefore,

    Factory fee = 2% of Accounts receivable

    = 2% * $30,000

    = $600

    The amount $600 has to be subtracted from the accounts receivable.

    Hence, the journal entry is as follows;

    Cash A/c ($30,000 - $600) Dr. $29,400

    Factory fee Expense A/c Dr. $600

    To Accounts Receivable $30,000

    (To record the account receivable)
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