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Concord Furniture factors $893000 of receivables to Pharoah, Inc. Pharoah assesses a 3% service charge on the amount of receivables sold. Concord Furniture factors its receivables regularly with Pharoah. What journal entry does Concord make when factoring these receivables

Respuesta :

Answer:

For recording the factory receivable we simply debited cash and service charge expenses and credited accounts receivable.

Explanation:

The Journal Entry is shown below:-

Cash Dr,                                      $860,210

Service charge expenses Dr,    $26,790

      To Accounts receivable                     $893,000

(Being factory receivable is recorded)

Working note

Service charge expenses = $893,000 × 3%

= $26,790

For recording the factory receivable we simply debited cash and service charge expenses and credited accounts receivable.

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