ANSWERS TO QUESTIONS

The entry for the sale now would be: Cash $200,000 – [($200,000 X (.05 + .04)] 182,000 Due from Factor ($200,000 X .04) 8,000 Loss on Sale of Receivables 14,000* Account Receivable 200,000 Recourse Obligation 4,000 *($200,000 X .05) + $4,000. This lower estimate for the recourse obligation reduces the amount of the loss—this will result in ... ................
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