Gant Company factored its receivables with recourse to Rowlin Bank.Gant received cash as a result of this transaction.This transaction is best described as a ________.
A)loan from Rowlin collateralized by Gant's accounts receivable
B)loan from Rowlin to be repaid by the proceeds from Gant's accounts receivable
C)sale of Gant's receivables to Rowlin with the risk of uncollectible accounts retained by Gant
D)sale of Gant's receivables to Rowlin with the risk of uncollectible accounts transferred to Rowlin

Question

Quizplus · Accepted Answer

When receivables are factored with recourse, Gant retains the risk of uncollectible accounts, meaning it is responsible if the receivables are not collected.

Gant Company Factored Its Receivables with Recourse to Rowlin Bank