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

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The correct journal entry would include a debit to Cash for $34,300 (which is $35,000 minus the 2% factoring fee of $700), a debit to Factoring Fee Expense of $700, and a credit to Accounts Receivable of $35,000. The total debits equal the total credits, maintaining the balance in the accounting equation.

A Company Factored $35,000 of Its Accounts Receivable and Was