Not the answer either On December 1, Newton Enterprises sells $100,000 of accoun

Question

Not the answer either On December 1, Newton Enterprises sells $100,000 of accounts receivable to a factor without resource, 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. For a compound transaction, if an amount box does not require an entry, leave it blank or enter "0" and When required, round your answers to the nearest dollar

Explanation / Answer

The Journal entry should be :

Cash 85,000

Factoring Expense 5,000

Due form factor 10,000

Account receivable 100,000.

Note : Factoring expenses (5% of 100,000)

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