On October 1, 2011, Brosnan Company sells (factors) $400,000 of receivables to Nation Factors, Inc.Nation assesses a service charge of 3% of the amount of receivables sold.The journal entry to record the sale by Brosnan will include:

Question

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The service charge is 3% of $400,000, which is $12,000. This amount is recorded as a Service Charge Expense.

On October 1, 2011, Brosnan Company Sells (Factors) $400,000 of Receivables