ABC Co Sold $80,000 of Accounts Receivable to First Bank and and Incurred

question 16

Essay

ABC Co. sold $80,000 of accounts receivable to First Bank and incurred a 2% factoring fee. Prepare the journal entry for ABC Co. to record the sale.

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Definitions:

Equal Cash Flow

Recurrent inflow or outflow of cash that is the same in amount for each period.

Annuity

A financial product that pays out a fixed stream of payments to an individual, typically used as part of retirement planning.

Sensitivity Analysis

A technique used in financial modeling to determine how different values of an independent variable affect a particular dependent variable under a given set of assumptions.

Residual Value

The estimated value of a fixed asset at the end of its useful life, important for calculating depreciation.