Laurel company factors $300,000 of receivables to hardy factors. hardy factors assesses a 3% fee on the amount of receivables sold. laurel co. factors its receivables to hardy factors regularly. what journal entry does laurel co. make when the factoring occurs?

The answers are:

Dr Cash 291,000

Dr Service Charge Expense 9,000

Cr Accounts Receivable 300,000

Explanation:

When assets increase, they are debited. Since cash increases then it should be recorded as a debit. Since accounts receivable decreases, then it should be recorded as a credit.

When expenses increase, they are debited. Since service charge expenses increases, then it should be recorded as a debit.  

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