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Example 7-9: Crest Textiles, Inc. factors $500,000 of accounts receivable with Commercial Factors, Inc., on a with recourse basis. Crest Textiles transfers the receivable records
Example 7-9: Crest Textiles, Inc. factors $500,000 of accounts receivable with Commercial Factors, Inc., on a with recourse basis. Crest Textiles transfers the receivable records to Commercial Factors, which will receive the collections. Commercial Factors assesses a finance charge of3 percent of the amount of accounts receivable and retains an amount equal to 5 percent of the accounts receivable (for probable adjustments). The recourse liability has a fair value of $6,000. Suppose the company is later paid back another $18,000: 500,000 x 927 (169000 25,000 485,oou 6,000 479,000 Instead, what if the company is later paid back another $20,000: Example 7-9: Crest Textiles, Inc. factors $500,000 of accounts receivable with Commercial Factors, Inc., on a with recourse basis. Crest Textiles transfers the receivable records to Commercial Factors, which will receive the collections. Commercial Factors assesses a finance charge of3 percent of the amount of accounts receivable and retains an amount equal to 5 percent of the accounts receivable (for probable adjustments). The recourse liability has a fair value of $6,000. Suppose the company is later paid back another $18,000: 500,000 x 927 (169000 25,000 485,oou 6,000 479,000 Instead, what if the company is later paid back another $20,000
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