Use the following information for the following questions:
Braun Company factors $300,000 of accounts receivable with Schick Factors Inc. on a without recourse basis. The receivables records are transferred to Schick Factors, which takes over full responsibility for collections. Schick assesses a finance charge of 4% and withholds an initial amount equal to 7% of the accounts receivable for returns and allowances.
-The cash paid by Schick Factors to Braun Company is
A) $300,000.
B) $288,000.
C) $267,000.
D) $279,000.

Question

Use the following information for  the following questions:
Braun Company factors $300,000 of accounts receivable with Schick Factors Inc. on a without recourse basis. The receivables records are transferred to Schick Factors, which takes over full responsibility for collections. Schick assesses a finance charge of 4% and withholds an initial amount equal to 7% of the accounts receivable for returns and allowances.
-The cash paid by Schick Factors to Braun Company is
A) $300,000.
B) $288,000.
C) $267,000.
D) $279,000.

Quizplus · Accepted Answer

The cash paid is calculated as $300,000 minus the finance charge (4% of $300,000) and the withheld amount (7% of $300,000), which equals $267,000.

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