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

question 58

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 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