Gipson Furniture factors $500,000 of receivables to Kwik Factors, Inc. Kwik Fact
ID: 2379399 • Letter: G
Question
Gipson Furniture factors $500,000 of receivables to Kwik Factors, Inc. Kwik Factors assesses a 3% service charge on the amount of receivables sold. Gipson Furniture factors its receivables regularly with Kwik Factors. What journal entry does Gipson make when factoring these receivables?
a. Cash 485,000
Loss on Sale of Receivables 15,000
Accounts Receivable 500,000
Cash 485,000
Accounts Receivable 485,000
Cash 500,000
Accounts Receivable 485,000
Gain on Sale of Receivables 15,000
Cash 485,000
Service Charge Expense 15,000
Accounts Receivable 500,000
a. Cash 485,000
Loss on Sale of Receivables 15,000
Accounts Receivable 500,000
Cash 485,000
Accounts Receivable 485,000
Cash 500,000
Accounts Receivable 485,000
Gain on Sale of Receivables 15,000
Cash 485,000
Service Charge Expense 15,000
Accounts Receivable 500,000
Explanation / Answer
Cash 485,000
Service Charge Expense 15,000
Accounts Receivable 500,000
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