Jervis Sells $75,000 of Its Accounts Receivable to Northern Bank

Multiple Choice

Jervis sells $75,000 of its accounts receivable to Northern Bank in order to obtain necessary cash. Northern Bank charges a 5% factoring fee. What entry should Jervis make to record the transaction?

A) Debit Cash $75,000; credit Factoring Fee Expense $3,750; credit Accounts Receivable $75,000
B) Debit Cash $71,250; credit Accounts Receivable $71,250
C) Debit Accounts Receivable $75,000; credit Factoring Fee Expense $3,750; credit Cash $71,250
D) Debit Cash $71,250; debit Factoring Fee Expense $3,750; credit Accounts Receivable $75,000
E) Debit Accounts Receivable $71,250; debit Factoring Fee Expense $3,750; credit Cash $75,000