Whispering Incorporated factored $164,900 of accounts receivable with Metlock Factors Inc. on a without-recourse basis. Metlock 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 Whispering Incorporated and Metlock Factors to record the factoring of the accounts receivable to Metlock.

The journal entries are as follows:

In the books of  Whispering:

Cash A/c Dr. $151,708

Due from Metlock Ac Dr. $9,894

Loss on sale of receivable A/c Dr. $3,298

         To Accounts receivable                         $164,900

(To record factoring of accounts receivable on without recourse)

Working notes:

Due from Metlock = $164,900 × 6%

                               = $9,894

Loss on sale of receivable:

=  $164,900 × 2%

= $3,298

In the books of Metlock Factors:

Accounts receivable A/c Dr. $164,900

            To Due to Whispering             $9,894

            To Financing revenue             $3,298

            To Cash                                   $151,708

(To record the accounts receivable)

answer; drop shippers;

the clients (funders) and customers (individual nonprofit staff) are great to work with. that i can be open about being a person of faith when appropriate. the variety of my tasks each day.