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ABC Incorporated sold $271,000 of accounts receivable to Best Factors Inc. on a with recourse basis. Best Factors assesses a 2% finance charge of the
ABC Incorporated sold $271,000 of accounts receivable to Best Factors Inc. on a with recourse basis. Best Factors assesses a 2% finance charge of the amount of accounts receivable and retains an amount equal to 7% of accounts receivable for possible adjustments. Assume the recourse liability has a fair value of $14,000.
When recording the transfer of receivables, which of the following does Best Factors credit?
Interest Revenue of $19,420
Gain on Transfer of Receivables $19,420
Interest Revenue of $5,420
Gain on Transfer of Receivables $5,420
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