Moon Inc.factors $1,000,000 of its accounts receivables with guarantee (recourse) for a finance charge of 4%.The finance company retains an amount equal to 8% of the accounts receivable for possible adjustments.What would be the debit to Cash in the journal entry to record this transaction?

Question

Quizplus · Accepted Answer

The cash received is the accounts receivable amount minus the finance charge and the retained amount: $1,000,000 - ($1,000,000 * 4%) - ($1,000,000 * 8%) = $880,000.

Moon Incfactors $1,000,000 of Its Accounts Receivables with Guarantee (Recourse) for for a Finance