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Sales without Recourse What Were You Inking (a tattoo removal company) sells (factors) $400,000 of accounts receivable to Factor, Inc. without recourse. Factor, Inc. charges
Sales without Recourse What Were You Inking (a tattoo removal company) sells (factors) $400,000 of accounts receivable to Factor, Inc. without recourse. Factor, Inc. charges a 2% finance charge, and retains 4% of receivables for possible adjustments due to sales discounts or returns. Record the sale from What Were You Inking's perspective: Five days after selling the receivables to Factor, Inc. a customer pays off their accounts receivable balance to Factor, Inc. less a $400 sales discount. Record the effects of this on What Were You Inking: Six days after the sale of receivables to Factor, Inc. one customer files for bankruptcy. They owe $1,000 in AR. Record this from What Were You Inking's perspective Record this from Factor Inc.'s perspective: Assume there were no additional sales discounts or sales returns. Record this for What Were You Inking. 102
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