A Company Sold $10,000 of Its Accounts Receivable and Was

question 137

Multiple Choice

A Company sold $10,000 of its accounts receivable and was charged a 2% factoring fee.How should the company record this transaction in the journal?

• A) \[\begin{array} { | l | r | r | }
• \hline \text { Cash } & 9,800 & \\
• \hline \text { Factoring Fee Expense } & 200 & \\
• \hline \text { Accounts Receivable } & & 10,000 \\
• \hline
• \end{array}\]
• B) \(\begin{array}{|l|r|r|}
• \hline \text { Cash } & 10,000 & \\
• \hline \text { Accounts Receivable } & & 10,000 \\
• \hline
• \end{array}\)
• C) \(\begin{array}{|l|r|r|}
• \hline \text { Cash } & 10,000 & \\
• \hline \text { Factoring Fee Expense } & & 200 \\
• \hline \text { Accounts Receivable } & & 9,800 \\
• \hline
• \end{array}\)
• D) \[\begin{array} { | l | r | r | }
• \hline \text { Accounts Receivable } & 10,000 & \\
• \hline \text { Factoring Fee Expense } & & 200 \\
• \hline \text { Cash } & & 9,800 \\
• \hline
• \end{array}\]
• E) \[\begin{array} { | l | r | r | }
• \hline \text { Accounts Receivable } & 9,800 & \\
• \hline \text { Factoring Fee Expense } & 200 & \\
• \hline \text { Cash } & & 10,000 \\
• \hline
• \end{array}\]

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Definitions:

Units

Refers to a standard quantity or measurement used for comparison and calculation, such as in physics or mathematics.

Month

A unit of time, approximately 30 days, used as a standard measurement for billing cycles, budgeting, and financial forecasting.

Variable Cost

Costs that vary directly with the level of production or output, such as materials and labor costs.

Net Income

The total profit of a company after subtracting all expenses from revenues.