Halen Company Factored $50,000 of Its Accounts Receivable with Recourse

question 8

Multiple Choice

Halen Company factored $50,000 of its accounts receivable with recourse.The factor retained 8% for sales adjustments and charged $3,000 as a financing fee.For simplicity,assume the estimated and actual amounts of the following items are equal: Sales adjustments $2,500
Uncollectible accounts 500
Assume the transfer is recorded as a sale by Halen Company.What is the loss or financing expense to be recognized on the transfer?

• A) $11,000
• B) $6,000
• C) $3,000
• D) $8,000

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Definitions:

Anterograde Amnesia

A memory disorder affecting the ability to form new memories following the onset of amnesia.

Short-term Memory

A limited-capacity store that can maintain information for a short period of time, typically seconds to minutes, without rehearsal.

Rehearsing

The act of practicing or repeating information or activities in order to improve skill or memorize information.

Rehearsing

involves repetitively practicing material to be remembered, a strategy to transfer information from short-term to long-term memory.