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: a. $10,000. b. $8,500. c. $8,000. d. $6,500.

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14 December, 09:50

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: a. $10,000. b. $8,500. c. $8,000. d. $6,500.

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Clinton Robbins · Answer 1

Correct one is Option D.

$6,500

Explanation:

Fair value of its 20% interest in the receivables 8000

Less: Factoring fee=50000*3% = 1500

Amount receivable from factor = 8000-1500=6500