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NEW QUESTION: 1
An entity often factors its accounts receivable. The finance company requires an 8% reserve and charges a 1.5% commission on the amount of the receivable. The remaining amount to be advanced is further reduced by an annual interest charge of 16%. What proceedsrounded to the nearest dollar) will the entity receive from the finance company at the time a US $110,000 account that is due in 60 days is turned over to the finance company?
A. US $99,550
B. US $83,630
C. US $81,950
D. US $96,895
Answer: D
Explanation:
The factor will hold out US $8,800$110,000 x 8%) as a reserve against returns and allowances and US $1,650$110,000 1.5%) as a commission. That leaves US 300,50111 to be advanced to the seller. However, interest at the rate of 16% annually is also to be withheld. For 60 days that interest would amount to approximately US $2,655assuming a 360-day year). The proceeds to be given to the seller equal US $96,895$99,550 - $2,655).
NEW QUESTION: 2
A. Option B
B. Option A
C. Option D
D. Option C
Answer: C
NEW QUESTION: 3
Answer:
Explanation: