Problem 3. Accounts Receivable (15 points) (A-10 points, B-5 points)
A. Finney Fabrics frequently factors its accounts receivable. On March 15, 2018, Finney sold without
recourse \$400,000 of these receivables to a factor. The factoring qualifies as a sale. The factor assessed a
finance charge of 5% on the gross amount of the factored receivables and held back an additional 4% as
security.
Prepare Finney's journal entry to record:
1. the sale of the receivables on March 15, 2018;
2. the sale of the receivables on March 15, 2018, assuming that Finney Fabrics estimates a \$3,000 recourse
liability.
JOURNAL
DATE
DESCRIPTION
POST.
REF
DEBIT
CREDIT