A company sells $900,000 of receivables to a factor. The Factor assesses a 2% service charge on the amount of receivables sold. What journal entry does the company make when selling these receivables?

1. Dr Cash 882,000

Dr Loss on Sale of Receivables 18,000

Cr Accounts Receivable 900,000

2. Dr Cash 882,000

Cr Accounts Receivable 882,000

3. Dr Cash 900,000

Cr Accounts Receivable 882,000

Cr Gain on Sale of Receivables 18,000

4. Dr Cash 882,000

Dr Service Charge Expense 18,000

Cr Accounts Receivable 900,000