Finney Fabrics frequently factors its accounts receivable. On March 15, 2018, Finney sold without recourse $400,000 of these receivables to a factor. The factoring qualifies as a sale. The factor assessed a finance charge of 5% on the gross amount of the factored receivables and held back an additional 4% as security On June 10, the factor returned the full balance owed to Finney.
Prepare Finney's journal entry to record
a. the sale of the receivables on March 15, 2018;
b. the receipt of cash on June 10, 2018.

Question

Quizplus · Accepted Answer

The Answer of Finney Fabrics frequently factors its accounts receivable. On March 15, 2018, Finney sold without recourse $400,000 of these receivables to a factor. The factoring qualifies as a sale. The factor assessed a finance charge of 5% on the gross amount of the factored receivables and held back an additional 4% as security On June 10, the factor returned the full balance owed to Finney.
Prepare Finney's journal entry to record
a. the sale of the receivables on March 15, 2018;
b. the receipt of cash on June 10, 2018.

Finney Fabrics Frequently Factors Its Accounts Receivable