Unformatted text preview: factor for uncollectible accounts. Low percentage rates are usually offered only when recourse is provided. Suppose a company factors $500,000 in accounts receivable at a rate of 3%. The company records this sale of accounts receivable by debiting cash for $485,000, debiting factoring expense (or service charge expense) for $15,000, and crediting accounts receivable for $500,000. In practice, the credit to accounts receivable would need to identity the specific subsidiary ledger accounts that were factored, although to simplify the example this is not done here....
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- Fall '10
- factoring receivables, accounts. Low percentage, specific subsidiary ledger