A Company Factored $45,000 of Its Accounts Receivable and Was

question 33

Multiple Choice

A company factored $45,000 of its accounts receivable and was charged a 3% factoring fee. The journal entry to record this transaction would include a:

• A) Debit to Cash of $45,000, a debit to Factoring Fee Expense of $1,350, and credit to Accounts Receivable of $43,650.
• B) Debit to Cash of $45,000 and a credit to Accounts Receivable of $45,000.
• C) Debit to Cash of $43,650, a debit to Factoring Fee Expense of $1,350, and a credit to Accounts Receivable of $45,000.
• D) Debit to Cash of $46,350 and a credit to Accounts Receivable of $46,350.
• E) Debit to Cash of $45,000 and a credit to Notes Payable of $45,000.

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Definitions:

Surplus

The amount of a product or resource that exceeds the amount actually utilized or demanded.

Binding Minimum Wage

A government-set minimum wage that is above the equilibrium wage, potentially leading to unemployment because the quantity of labor supplied exceeds the quantity demanded.

Labor Demanded

The total number of workers that employers are willing and able to hire at a given wage rate in a certain period of time.

Labor Supplied

The aggregate amount of hours that employees are prepared and capable of working for a specified rate of pay.