a. On June 30, 2021, Salah Fixtures was considering alternatives to bolster its cash position.

Option 1: transferring $400,000 in accounts receivable to Firmino finance company without resource for a %5 fee

Option 2: Transferring $400,000 in accounts receivable to Firmino with recourse. Fimino charges a 4% receivables factored with recourse. Under this option, Salah estimates a $3,000 recourse liability

Under either option Firmino will immediately remit 90% of the factored receivables to Salah and retain 10%. When Fimino collects the remaining receivables, it remits the amount, less the fee, to Salah. Salah estimates that the fair value of the retained portion of the receivables is $25,000. (ignoring the factoring fee)

The amount of loss on sale of receivables to be reported by Salah is:

a. Option 1- 35,000 option 2- 34,000

b. Option 1- 35,000 optiont-2 31,000

c. Option 1- 20,000 option 2- 16,000

d. Option 1- 20,000 option 2- 19,000

b. The amount of receivable from factor to be reported by Salah is:

a. Option 1- 40,000 Option 2- 40,000

b. Option 1-25,000 Option 2 28,000

c. Option 1-5,000 Option 2 - 9,000 O

d. Option1-9,000 Option 2 - 12,000

c. The effect of Option 1 on Salah's balance sheet is:

a. ASSETS-decrease LIABILITIES-Increase EQUITY decrease

b. ASSETS-increase LIABILITIES-No effect EQUITY-increase

c. ASSETS-Increase LIABILITIES-Increase EQUITY-decrease

d. ASSETS-decrease LIABILITIES-no effect EQUITY-decrease

d.The effect of Option 2 on Salah's balance sheet is:

a. ASSETS-decrease LIABILITIES-Increase EQUITY-Decrease

b. ASSETS-increase LIABILITIES-No effect EQUITY-increase

c. ASSETS- Increase LIABILITIES-Increase EQUITY-Decrease

d. ASSETS-decrease LIABILITIES- No effect EQUITY-Decrease

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