Answer:
Explanation:
Before passing the journal entry we have to do the calculations which is shown below:
The accounts receivable is $252,500
Financial charge = 2% of accounts receivable = $252,500 × 2% = $5,050
Recourse obligation fair value = $4,940
The loss on receivables sold would be = $5,050 + $4,940 = $9,990
Reserve amount = 4% of accounts receivable = $252,500 × 2% = $10,100
Now the journal entry would be shown below:
Cash A/c Dr $237,350
Reserve A/c Dr $10,100
Loss on receivables sold A/c Dr $9,990
To Recourse liability $4,940
To Accounts receivable $252,500
(Being the sale of receivables with recourse is recorded)
