Wilkinson Corporation factored, with guarantee (recourse), $400,000 of accounts receivable with Huskie Financing.The finance charge is 3%, and 5% was retained to cover sales discounts, sales returns, and sales allowances.What amount of cash would Wilkinson receive on the sale of receivables?

Question

Quizplus · Accepted Answer

The amount of cash Wilkinson would receive can be calculated as:
Amount of receivables - Finance charge - Retention amount
= $400,000 - (3% x $400,000) - (5% x $400,000)
= $400,000 - $12,000 - $20,000
= $368,000
Therefore, the correct choice is C.

Wilkinson Corporation Factored, with Guarantee (Recourse), $400,000 of Accounts Receivable