On October 1, 2020, Bramble Company sells (factors) $712000 of receivables to Milago Factors, Inc. Milago assesses a service charge of 3% of the amount of receivables sold. The journal entry to record the sale by Bramble will include a debit of $21360 to Service Charge Expense. O a debit of $733360 to Cash. O a debit of $712000 to Accounts Receivable. O a credit of $733360 to Cash.
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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