This preview shows page 1. Sign up to view the full content.
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....
View Full Document
- Fall '10