My client runs a restaurant and recently sold their future receipts for cash flow needs and I need help understanding how to book this. $217,573.98 of receipts sold for $168,662 and will be repaid with a daily payment of $601. Client received the full $168k. What are the entries for this?
Seems like:
Dr
Cash $168,662
Loss on sale 48,912
Cr
Payable $217,573.98
Then each repayment of $601 simply reduces the payable. Or does each repayment need to be apportioned between the payable account and a contra asset account or interest/fee expense? Seems a little different from factoring.