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Sun Inc. factors $2,000,000 of its Accounts receivable without recourse for a finance charge of 5%. The finance company retains an amount equal to 10%
Sun Inc. factors $2,000,000 of its Accounts receivable without recourse for a finance charge of 5%. The finance company retains an amount equal to 10% of Accounts receivable for possible adjustments. An external appraiser expects $75,000 of Accounts receivable to be uncollectible. What should be recorded as a gain (loss) on the sale of receivables?
A. Loss of $375,000
B. Loss of $175,000
C. Loss of $100,000
D. Loss of $75,000
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