Miles to Go is a travel agency specializing in tours to Africa and Australia. Miles to Go has 4,000,000 in accounts receivable. During 2020, Miles to Go enters into a factoring arrangement with Fox Factors to factor 75% of their receivables. The agreement with Fox calls for a services charge of 2% of the amount of receivables sold. The effects on the statement of financial position for Miles to Go of factoring its receivables includes a(n)

Miles to Go is a travel agency specializing in tours to Africa and Australia. Miles to Go has 4,000,000 in accounts receivable. During 2020, Miles to Go enters into a factoring arrangement with Fox Factors to factor 75% of their receivables. The agreement with Fox calls for a services charge of 2% of the amount of receivables sold. The effects on the statement of financial position for Miles to Go of factoring its receivables includes a(n) : a. Increase in assets of $4,000,000. b. Increase in cash of $2,940,000. c. Increase in cash of $3,920,000. d. Increase in equity of $80.000