Question

On October 1, 2010, Katy Songs Company sells (factors)$400,000 of receivables to Nation Factors, Inc. Nation assesses aservice charge of 3% of the amount of receivables sold. The journalentry to record the sale by Katy Songs Company willinclude:

 

a.

a debit of $400,000 to Accounts Receivable.

 

b.

a credit of $412,000 to Cash.

 

c.

a debit of $412,000 to Cash.

 

d.

a debit of $12,000 to Service Charge Expense.

 



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