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

Question

Business

Jameson Becker

24 December, 06:48

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

+1

Answers (1)

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Alfred Coffey · Answer 1

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)

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. Trueb. False

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