On 1 July, 2020, DELTA Company factored receivables of $200,000 to ABC Company which assesses a finance charge of 2% of the receivables and retains 5% of the receivables

Accounting Jan 18, 2021

On 1 July, 2020, DELTA Company factored receivables of $200,000 to ABC Company which assesses a finance charge of 2% of the receivables and retains 5% of the receivables. Assume that the transaction is in a without guarantee (without recourse) basis. The Due from factor to be reported is A. $6,000 OB. $4,000 C. $14.000 D. $10,000

Expert Solution

Due from factor to be reported = Company facotred Receivable * Retention percentage

= $200,000 * 5%

= $10,000

Therefore the correct option is D $10,000

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