On February 1, 2019, Henson Company factored receivables with a carrying amount of $300,000 to Agee Company. Agee Company assesses a finance charge of 3% of the receivables and retains 5% of the receivables. Relative to this transaction, you are to determine the amount of loss on sale to be reported in the income statement of Henson Company for February. Assume that Henson factors the receivables on a with guarantee (recourse) basis. What is the amount of recourse liability to be recorded on February? Select one: O a. $291,000. O b. None of the answers is correct.

On February 1, 2019, Henson Company factored receivables with a carrying amount of $300,000 to Agee Company. Agee Company assesses a finance charge of 3% of the receivables and retains 5% of the receivables. Relative to this transaction, you are to determine the amount of loss on sale to be reported in the income statement of Henson Company for February. Assume that Henson factors the receivables on a with guarantee (recourse) basis. What is the amount of recourse liability to be recorded on February? Select one: O a. $291,000. O b. None of the answers is correct.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

On February 1, 2019, Henson Company factored receivables with a carrying amount of $300,000 to Agee
Company. Agee Company assesses a finance charge of 3% of the receivables and retains 5% of the
receivables. Relative to this transaction, you are to determine the amount of loss on sale to be reported
in the income statement of Henson Company for February. Assume that Henson factors the
receivables on a with guarantee (recourse) basis.
What is the amount of recourse liability to be recorded on February?
Select one:
O a. $291,000.
O b. None of the answers is correct.
O c. $300,000.
O d. $9,000.
e. $276,000.
O f. $285,000.

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