TechCom factored $35,000 of its accounts receivable and was charged a 2% factoring fee. The journal entry to record this would include a debit to Cash of $35,000; a debit to Factoring Fee Expense of $700; and a credit to Accounts Receivable of $35,700.

Question

Quizplus · Accepted Answer

The correct entry should include a debit to Cash for $34,300 (which is $35,000 minus the 2% fee of $700), a debit to Factoring Fee Expense of $700, and a credit to Accounts Receivable for $35,000.

TechCom Factored $35,000 of Its Accounts Receivable and Was Charged