FINANCIAL ACCOUNTING>IC<
FINANCIAL ACCOUNTING>IC<
15th Edition
ISBN: 9781119344988
Author: Kimmel
Publisher: WILEY C
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Chapter 8, Problem 8.16E
To determine

Sale of receivables to a factor

Receivables can be liquidated by selling the receivables to a factor, such as financial institutions or bankers, by losing some percentage of receivables as fees (Service charge expense) before its maturity period. Factors will collect cash on receivables directly from the respective customers at its maturity.

To describe: The reason behind the sale of receivables to factors, by Incorporation D.

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