A company factored $40,000 of its accounts receivable and was charged a 1% factoring fee.The journal entry to record this transaction would include a debit to Cash of $39,600,a debit to Factoring Fee Expense of $400,and credit to Accounts Receivable of $40,000.

Question

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This is the correct journal entry for factoring accounts receivable with a 1% fee. The total cash received would be $39,600 ($40,000 - $400).

A Company Factored $40,000 of Its Accounts Receivable and Was