A company sells $900,000 of accounts receivable to a factor for cash less a 2% service charge. The entry to record the sale should not include a
A) debit to Interest Expense for $18,000.
B) debit to Cash for $882,000.
C) debit to Service Charge Expense for $18,000.
D) credit to Accounts Receivable for $900,000.

Question

Quizplus · Accepted Answer

The entry should not include a debit to Interest Expense because the 2% service charge is recorded as a Service Charge Expense, not as an interest expense.

A Company Sells $900,000 of Accounts Receivable to a Factor