Due to cash flow issues, Angler Fish Company factors $540.000 of its accounts receivable to Gause Finance Company with recourse. Angler does not normally transfer its receivables. Gause retained 10% of the factored receivables and charged a 5% commission on the gross amount of the receivables. Angler estimated a recourse liability of $10,000. What amount should Angler record as a Loss from Factoring? $10.000 $27.000 O $54.000 O s81.000 O $37,000

Due to cash flow issues, Angler Fish Company factors $540.000 of its accounts receivable to Gause Finance Company with recourse. Angler does not normally transfer its receivables. Gause retained 10% of the factored receivables and charged a 5% commission on the gross amount of the receivables. Angler estimated a recourse liability of $10,000. What amount should Angler record as a Loss from Factoring? $10.000 $27.000 O $54.000 O s81.000 O $37,000

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter6: Business Expenses

Section: Chapter Questions

Problem 43P

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Sailor Moon sold accounts receivable without recourse for 6,100,000. The entity received 4,000,000 cash immediately from the factor. The remaining 275,000 will be received once the factor verifies that none of the account receivable is in dispute. The accounts receivable had a face amount of 5,200,000. The entity had previously established an allowance for bad debts of 230,000 in connection with such accounts. What amount of loss on factoring should be recognized? a. 925,000 b. 295,000 c. 695,000 d. 965,000
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