(Solution) - Nicks Incorporated sells 2 450 000 of its accounts receivable to -(2025 Original AI-Free Solution)

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Academic Level: Undergrad. (yrs 3-4)

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Nicks Incorporated sells $ 2,450,000 of its accounts receivable to Fairfield Factors (FF) without recourse. FF charges a fee equal to 7% of the receivables factored and holds back an additional 4% as security. FF will return the hold back to Nicks when the receivables are collected. Assuming a sale, prepare the journal entry to record Nicks Incorporated?s sale of the accounts receivable to FF.