Factoring receivables is beneficial to a seller for all of thefollowing reasons except: Allows firms to receive
Question:
Factoring receivables is beneficial to a seller for all of thefollowing reasons except: Allows firms to receive cash earlier.Passes ownership of the receivables to the factor. There are nofees for factoring. Seller avoids the cost of billing andaccounting for receivables. May transfer the risk of bad debts tothe factor.
Allows firms to receive cash earlier.
Passes ownership of the receivables to the factor.
There are no fees for factoring.
Seller avoids the cost of billing and accounting forreceivables.
May transfer the risk of bad debts to the factor.
MacKenzie Company sold $180 of merchandise to a customer whoused a Regional Bank credit card. Regional Bank deducts a 4%service charge for sales on its credit cards. MacKenzieelectronically remits the credit card sales receipts to the creditcard company and receives payment in approximately 5 days. Thejournal entry to record this sale transaction would be:
Debit Cash of $180 and credit Sales $180.
Debit Cash of $180 and credit Accounts Receivable—Regional$180.
Debit Accounts Receivable—Regional $172.80; debit Credit CardExpense $7.20 and credit Sales $180.
Debit Cash $172.80; debit Credit Card Expense $7.20 and creditSales $180.
Debit Cash $172.80 and credit Sales $172.80.
Financial Reporting and Analysis
ISBN: 978-0078025679
6th edition
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon