CPA · Question 29 · Area II: Balance Sheet Accounts
Oakwood Corp. factored $500,000 of accounts receivable to Finance Co. under the following terms:<br/>- Finance Co. advances 85% of receivables factored<br/>- Finance Co. charges a 3% factoring fee<br/>- Finance Co. charges 12% annual interest on advances<br/>- The arrangement is without recourse<br/>- Average collection period is 45 days<br/><br/>What is the total cost of factoring that Oakwood should recognize?
Answer options:
$15,000
$21,288
$66,000
$51,000
50 questions · hints · full answers · grading
Expert