Gant Company Factored Its Receivable with Recourse to Rowlin Bank

question 107

Multiple Choice

Gant Company factored its receivable with recourse to Rowlin Bank. Gant received cash as a result of this transaction. Assuming the three conditions for a sale are met, this transaction is best described as a ________.

• A) loan from Rowlin collateralized by Gant's accounts receivable
• B) loan from Rowlin to be repaid by the proceeds from Gant's accounts receivable
• C) sale of Gant's receivables to Rowlin with the risk of uncollectible accounts retained by Gant
• D) sale of Gant's receivables to Rowlin with the risk of uncollectible accounts transferred to Rowlin

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