Question

Cheyenne Incorporated factored $133,800 of accounts receivable with Ayayai Factors Inc. on a without-recourse basis. Ayayai assesses a 2% finance charge of the amount of accounts receivable and retains an amount equal to 6% of accounts receivable for possible adjustments.

Prepare the journal entry for Cheyenne Incorporated and Ayayai Factors to record the factoring of the accounts receivable to Ayayai. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

No.	Account Titles and Explanation	Debit	Credit
	Cheyenne
1.	enter an account title for the journal entry for Cheyenne	enter a debit amount	enter a credit amount
	enter an account title for the journal entry for Cheyenne	enter a debit amount	enter a credit amount
	enter an account title for the journal entry for Cheyenne	enter a debit amount	enter a credit amount
	enter an account title for the journal entry for Cheyenne	enter a debit amount	enter a credit amount
	Ayayai
2.	enter an account title for the journal entry for Ayayai	enter a debit amount	enter a credit amount
	enter an account title for the journal entry for Ayayai	enter a debit amount	enter a credit amount
	enter an account title for the journal entry for Ayayai	enter a debit amount	enter a credit amount
	enter an account title for the journal entry for Ayayai	enter a debit amount	enter a credit amount

Answer 1

Answer:

Cheyenne
	Debit	Credit
Cash	123096		=133800*(1-6%-2%)
Due from Factor	8028		=133800*6%
Loss on Sale of Receivable	2676
Accounts Receivable		133800
Ayayai
Accounts Receivable	133800
Due to Customer		8028
Interest/Finance Revenue		2676
Cash		123096