Question

On April 1, Aloe, Inc. factored $80,000 of its accounts receivable without recourse. The factor retained 10% of the accounts receivable as an allowance for sales returns and charged a 5% commission on the gross amount of the factored receivables. What amount of cash did Aloe receive from the factored receivables

Answer 1

Answer: $68,000

Step-by-step explanation:

Based on the information that have been provided in the question, the amount of cash that Aloe receive from the factored receivables will be:

= $80,000 - (10% × $80,000) - (5% × $80,000)

= $80000 - $8000 - $4000

= $80,000 - $12,000

= $68,000