Angler Fish Co. factored $540,000 of its accounts receivable to Gause Finance Co. Gause Finance advanced 85% of the factored receivables and charged a 10% commission on the gross amount of the receivables. All conditions for a sale have been met.
Required:
Prepare the journal entries necessary to record the following:
a.The sale of the receivables.
b.Sales Returns and Allowances of $2,200 on a factored account.
c.The conclusion of the sale agreement.

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The Answer of Angler Fish Co. factored $540,000 of its accounts receivable to Gause Finance Co. Gause Finance advanced 85% of the factored receivables and charged a 10% commission on the gross amount of the receivables. All conditions for a sale have been met.
Required:
Prepare the journal entries necessary to record the following:
a.The sale of the receivables.
b.Sales Returns and Allowances of $2,200 on a factored account.
c.The conclusion of the sale agreement.