Jervis Sells $75,000 of Its Accounts Receivable to Northern Bank

question 93

Multiple Choice

Jervis sells $75,000 of its accounts receivable to Northern Bank in order to obtain necessary cash.Northern Bank charges a 5% factoring fee.What entry should Jervis make on to record the transaction?

• A)Debit Cash $71,250;debit Factoring Fee Expense $3,750;credit Accounts Receivable $75,000
• B)Debit Accounts Receivable $71,250;debit Factoring Fee Expense $3,750;credit Cash $75,000
• C)Debit Cash $75,000;credit Factoring Fee Expense $3,750;credit Accounts Receivable $75,000
• D)Debit Cash $71,250;credit Accounts Receivable $71,250
• E)Debit Accounts Receivable $75,000;credit Factoring Fee Expense $3,750;credit Cash $71,250

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Definitions:

Major Organic Product

The primary organic compound produced in the highest yield from an organic chemical reaction.

Major Organic Product

The primary product of an organic reaction that is formed in the greatest yield compared to any other products.

Major Product

The primary product of a chemical reaction that is formed in the greatest quantity compared to other products.

Phthalic Acid

An aromatic dicarboxylic acid, with formula C6H4(CO2H)2, it is used as a precursor to other chemicals such as dyes, perfumes, and plastics.