Question

Trell Corporation transferred $56,000 of accounts receivable to a local bank. The transfer was made without recourse. The local bank remits 80% of the factored amount to Trell and retains the remaining 20%. When the bank collects the receivables, it will remit to Trell the retained amount less a fee equal to 3% of the total amount factored. Trell estimates a fair value of its 20% interest in the receivables of $11,000 (not including the 3% fee). Trell will show an amount receivable from factor of:

Answer 1

$9,320

Step-by-step explanation:

Calculation to determine what Trell will show as the amount receivable from factor of:

Using this formula

Amount receivable =Interest in the receivables-( Local bank transferred accounts receivable*Fees percentage)

Let plug in the formula

Amount receivable=$11,000 - ($56,000 × 3%)

Amount receivable=$11,000-$1,680

Amount receivable= $9,320

Therefore Trell will show an amount receivable from factor of:$9,320