A company sells $800,000 of accounts receivable to a factor for cash, incurring a 2% service charge.The entry to record the sale should not include a
A)debit to Interest Expense for $16,000.
B)debit to Cash for $784,000.
C)debit to Service Charge Expense for $16,000.
D)credit to Accounts Receivable for $800,000.

Question

Quizplus · Accepted Answer

Interest Expense is not involved in the transaction; the service charge is recorded as Service Charge Expense.

A Company Sells $800,000 of Accounts Receivable to a Factor