Question
Company D decides to factor $600,000 of its accounts receivables with recourse. The factoring company charges 4% to cover its expenses and risks. The factoring
Company D decides to factor $600,000 of its accounts receivables with recourse. The factoring company charges 4% to cover its expenses and risks. The factoring company also retains 9% of the accounts receivable for possible returns. Company D estimates the fair value of the recourse liability to be $25,000. How much cash does Company D receive as a result of selling its accounts receivable?
- A. $600,000
- B. $540,000
- C. $522,000
- D. $575,000
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Fundamental accounting principle
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta
21st edition
1259119831, 9781259311703, 978-1259119835, 1259311708, 978-0078025587
