Question

Wilkinson Corporation factored, with recourse, $500,000 of accounts receivable with Huskie Financing. The finance charge is...

Wilkinson Corporation factored, with recourse, $500,000 of accounts receivable with Huskie Financing. The finance charge is 3%, and 5% was retained to cover sales discounts, sales returns, and sales allowances. Wilkinson estimates the recourse obligation at $12,000. How will Wilkinson report the sale of receivables?

a. $473,000

b. $463,000

c. $460,000

d. $448,000

Homework Answers

Answer #1
Particulars Amount($)
Value of Accounts receivable        5,00,000
Less: Finance charges @3%           15,000
($500,000 x 3%)
Less: Reserved for sales discount, allowances and returns @3%           25,000
($500,000 x 5%)
Less: Recourse obligation           12,000
Sale value of receivables       4,48,000
Hence, Option D is correct
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