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OrionGal
November 22, 2022
Question

Accounts Receivable Sold

  • November 22, 2022
  • 2 replies
  • 0 views

Hi everyone - 

I need a little explanation on why I would use the Accounts Receivable: Accounts Receivable Sold...

I though it was a loan...

After reading the agreement, its not... My COO signed this agreement as a Sale of A/R.  

How do I JE this under the AR Sold Account?

When I run the A/R Aging, it shows as a negative $150,000.

I just took over this new position and the previous controller entered like this... see picture:

 

$  120,000.   Purchase Price (What we got for it before fees)

$  150,000.   Amount Sold (A/R Sold)

$      2,900.   Processing Fees

$117,100.   Funded Amount

 

Thank you in advance!! I have a headache trying to figure this out for almost a whole day!!

Thanks everyone!!

2 replies

Shafiqch
Shafiqch
March 25, 2023

You can read more about factoring accounting to account for AR sold, Charges and funding. 

Rainflurry
Rainflurry
March 26, 2023

@OrionGal 

 

I assume that the previous controller used A/R Sold out of convenience.  So, instead of creating individual A/R credits for each customer and then applying them to close out the invoices, it was quick and easy to create a journal entry with a lump sum credit to A/R.  The problem, as you're finding out, is that using a journal entry (J/E) to record the sale of the receivables does not close them out.  Now, they're all sitting open in your A/R Aging Report.

 

Is the $150K in invoices sold still showing open in your A/R Aging report too?  Give me an idea of how many customers/invoices we're talking about and I can assist further in getting them closed.     

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