Business, 31.03.2020 01:36 eatheng4441

Sheffield Furniture factors $914000 of receivables to Ivanhoe, Inc. Ivanhoe assesses a 3% service charge on the amount of receivables sold. Sheffield Furniture factors its receivables regularly with Ivanhoe Factors. What journal entry does Sheffield make when factoring these receivables?

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Answer from: awesome266

Amount of cash received = $886580

Factoring Commission = $27420

Explanation:

Amount of cash received = 914000 x 97% = 886580

Factoring Commission = 914000 x 3% =27420

Total Receivable= 886580+27420=$914000

Answer from: jaylanmahone223

Dr Cash 886,580

Dr Factoring fees 27,420

Cr Accounts receivable 914,000

Explanation:

In business, factoring companies purchase accounts receivables from other companies at a discount price and then they collect them earning the difference.

There are two ways to record factoring expenses:

When they are relatively small (e.g. 2-3% of accounts receivable) they can be recorded as loss on sales or factoring expenses depending on the accounting procedures.But sometimes they might be rather significant, e.g. 10% or more, then the loss or expense must be segregated between interest expenses, factoring fees, and bad debt expenses.

In this case, the factoring fees were $914,000 x 3% = $27,420, and didn't represent a significant cost. Therefore they can be recorded as a loss on sales or factoring fees. Since Sheffield usually does this type of transactions, in my opinion the proper record should be factoring fees.

Answer from: Quest

net worth is the difference between what you own and what you have. if you exceed your liabilities you have a positive net worth. if your liabilities are greater than your assets you have a negative net worth. its a snapshot of your financial situation. if you calculate your net worth you will see the end result of everything you've earned and spent as of now. net worth statements and all you asked of can you determine where you are, how to get where you want to be, if your spending to much. honestly it can tell you a lot of things. i can go on, but you can paint the picture from here.

explanation:

Answer from: Quest

a. $48.75

is the answer to your question

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