This entry records the receipt of cash as a debit for $291,000, recognizes the service charge expense based on a percentage of the receivables as a debit to Service Charge Expense for $9,000, and reduces accounts receivable with a credit for the face value of the receivables that are sold, which is $300,000.

Requesting credit from a vendor is a concern for dealing with accounts payable. Determining to whom to extend credit is a principle of managing accounts receivable.

Which one of the following is not one of the principles of managing accounts receivable?

Determining from which vendor credit should be requested

Monitoring collections

Accelerating cash receipts from receivables when necessary

	Establishing a payment period
This entry records the receipt of cash as a debit for $291,000, recognizes the service charge expense based on a percentage of the receivables as a debit to Service Charge Expense for $9,000, and reduces accounts receivable with a credit for the face value of the receivables that are sold, which is $300,000.

Laurel Company factors $300,000 of receivables to Hardy Factors. Hardy assesses a 3% fee on the amount of receivables sold. Laurel Co. factors its receivables to Hardy regularly. What journal entry does Laurel make when the factoring occurs?

Cash 291,000 Service Charge Expense 9,000 Accounts Receivable 300,000

Cash 291,000 Accounts Receivable 291,000

Cash 291,000 Loss on Sale of Receivables 9,000 Accounts Receivable 300,000

Cash 300,000 Gain on Sale of Receivables 9,000 Accounts Receivable 291,000