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Carolina Mills sold $750,000 of receivables to Palmetto Factors with recourse. Palmetto Factors assesses a...

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Accounting

Carolina Mills sold $750,000 of receivables to Palmetto Factors with recourse. Palmetto Factors assesses a finance charge of 3% and retains an amount equal to 5% of the accounts receivable for probable adjustments. Carolina Mills estimates that the recourse has a fair value of $11,250. Palmetto Factors is able to collect all the receivables except for two accounts that total $6,750. Which of the following BEST describes the transaction?
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Palmetto Factors will have interest revenue of $27,000, and Carolina Mills will have a $33,750 loss on the sale.
Palmetto Factors will have interest revenue of $22,500, and Carolina Mills will have a $29,250 loss on the sale.
Palmetto Factors will have interest revenue of $22,500, and Carolina Mills will have a $33,750 loss on the sale.
Palmetto Factors will have interest revenue of $29,250, and Carolina Mills will have a $29,250 loss on the sale.

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