Headland Woodcrafters sells $233,600 of receivables to Commercial Factors, Inc. on a full guarantee for credit losses. Commercial assesses a finance charge of 5% and retains an amount equal to 4% of accounts receivable. Prepare the journal entry for Headland to record the sale. (If no entry is required, select "No Entry" for the account titles and enter O for t amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Cash Due from Factor Loss on Sale of Receivables Accounts Receivable Debit 212,576 9,344 11,680 Credit 233,600
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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