E8-17 (Transfer of Receivables without Recourse) JFK Corp. factors \$300,000 of accounts receivable with
LBJ Finance Corporation on a without recourse basis on July 1, 2008. The receivables records are transferred to
LBJ Finance, which will receive the collections. LBJ Finance assesses a finance charge of 1\frac{1}{2}\% of the amount
of accounts receivable and retains an amount equal to 4\% of accounts receivable to cover sales discounts, returns,
and allowances. The transaction is to be recorded as a sale.
Instructions
(a) Prepare the journal entry on July 1, 2008, for JFK Corp. to record the sale of receivables without recourse.
(b) Prepare the journal entry on July 1, 2008, for LBJ Finance Corporation to record the purchase of receivables
without recourse.