Knowledge Check On September 1, Sandhill Motors sells $405.000 of its receivables to Factors Incorporated. Factors Incorporated assess a service charge of 2% of the amount of receivables sold. Prepare the entry on Sandhill Motors' books to record the sale of the receivables. (List all debit entries before credit entries. Credit occount titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Sep. 1 Cash Service Charge Expense Accounts Receivable Debit Credit 405000
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.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
