Answer
Kimmel should decrease accounts receivable by the amount of accounts receivable factored, increase money by the amount received from the factor, and record a loss to account for the accounts receivable factored on August 1, 2012.
Work Step by Step
Kimmel should do this because factoring of accounts receivable without recourse basis is equivalent to a sale. The difference between the cash received and the carrying amount of the receivables is a loss.
