On December 1, Newton Enterprises sells $100,000 of accounts receivable to a factor without recourse, receives 85% of the value of the factored accounts, and is charged a 10% commission on the gross amount of the factored accounts receivable. Newton normally factors its accounts receivable. Prepare Newton’s journal entry.
Prepare journal entry to record the given transaction.
Accounts receivable:
Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.
Prepare journal entry to record the given transaction.
Date | Account Title and Explanation | Debit | Credit |
 | Cash (2) | 75,000 |  |
 | Factory expense (1) | 15,000 |  |
 | Receivables from factor(3) | 10,000 |  |
 |     Accounts receivable |  | 100,000 |
 | ( To record sale of receivables to the factor) |  |  |
Table (2)
Working notes:
(1) Calculate the factory expense.
(2) Calculate the cash to be received during the year 2019
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