Answer:
Given that,
Carrying amount = $231,700
Recourse basis = $171,500
Fair value of recourse provision = $3,000
Net proceeds:
= Cash received - Recourse liability
= $171,500 - $3,000
= $168,500
Loss on sale of receivables:
= Carrying value - Net proceeds
= $231,700 - $168,500
= $63,200
Therefore, the journal entry is as follows:
Cash A/c Dr. $171,500
Loss on sale of receivables A/c Dr. $63,200
To recourse liability $3,000
To Accounts Receivable $231,700
(To record the loss on sale of receivables)