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:

Budget Variances

The difference between budgeted and actual figures for revenues or expenditures, indicating under or overspending.

Underapplied

A situation where the allocated manufacturing overhead costs are less than the actual overhead costs incurred, leading to underestimation of product costs.

Overapplied

A condition where the allocated amount of indirect costs exceeds the actual amount incurred.

Variable Overhead Efficiency

The variance indicating the efficiency with which a variable overhead cost is incurred in relation to an activity level, such as machine or labor hours.