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Hi Sir,for PYQ Mar/June 2017 Q1(b) The examiner answer for agreement 2
“The receivables and liability balances would gradually be reduced as the factor recovered the cash from Diamond’s customer which would be adjusted for the imputed interest and expensed in profit or loss”
1.How the receivable reduced when entered into the factoring?
2.The liability reduced when the factor recover the funds from receivable and will charge int to the Diamond?is it correct?So,DR liability DR int DR Bank CR receivable?
Thanks.
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