Week 6 Disposing of Receivables

Week 6 Disposing of Receivables - Accounts Receivable...

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12/10/10 Disposing of Receivables Companies sometimes want to convert receivables to cash before they are due. They can sell or factor receivables. They may pledge receivables as security for a loan.
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12/10/10 Disposing of Receivables Example: Sold 20,000 worth of receivables to Acme Bank. The Bank charged a 5% factoring fee. Cash 19,000 Factoring Fee Expense 1,000
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Unformatted text preview: Accounts Receivable 20,000 Factoring Fee Calculation: 20,000 *.05 12/10/10 Disposing of Receivables Example: Borrowed 20,000 dollars from Acme Bank. The Bank pledged 25,000 worth of receivables. Cash 20,000 Notes Payable 20,000 *** Collateral Agreement only comes into play in case of a default of the...
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This note was uploaded on 12/09/2010 for the course ACCT 201 taught by Professor Tracyedmond during the Fall '10 term at Park.

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Week 6 Disposing of Receivables - Accounts Receivable...

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