Lampu Terang Bhd factored with recourse RM150,000 of account receivable for a cash proceed of RM140,000 to the Adawiyah Bank Berhad. Adawiyah Bank Berhad withheld 8% of account receivable as protection against sales return and allowance. The difference between factored account receivable and cash proceed is considered as a finance charge.
Adawiyah Bank Berhad manage to collect RM136,000 of the factored account receivable, which include sales return and allowance of RM5,500. The remaining balance of account receivable is uncollectible. Settlement of factored accounts receivable as done on this date.
– journal entries for Lampu Terang Bhd