On April 1 of the current year, Troubled Company factored receivables with a carrying value of $85,000 for $60,000 in cash from Scrooge Lenders. The transfer was made without recourse. The arrangement also includes a factoring fee equal to 4% of the total factored amount. On April 1, Troubled would:

Multiple Choice

• Credit Deferred Interest Expense for $25,000.

• Credit Factored Accounts Receivable for $85,000.

• Debit Discount on Liability for $25,000.

• Debit Loss on Sale of Receivables for $25,000.