Bappa Apparel manufactures fine sportswear for many national retailers and frequently sells its receivables to factors as a means of accelerating cash collections. Bappa sold $180,000 of receivables to a factor. The receivables were sold without recourse. The factor charged 6% and held back 5% for sales adjustments. Assume that the factor estimates that expected credit losses are 2% of the accounts receivable balance. Record the journal entry for the factor at the time the receivables are purchased. Account Name Dr. Cr. Accounts Receivable 180,000 Payable to Seller of Receivables 180,000 Receivable from Factor 10,800 Cash 156,996 To record purchase of receivables Sales Returns 9,000 Bad Debt Expense 3,204 To record estimate of uncollectible accounts