Answer:
Date Journal Entry Debit Credit
Aug 15 Cash $245,152
Due from factors $10,432
Loss on sale of receivables $$10,216
Recourse liability $5,000
Account receivable $260,800
Cash received = ($260,800*94%) = $245,152
Add: Due from factor($260,800*6%) = $10,432
Less: recourse obligation= <u>$5,000</u>
Net proceeds= <u>$
229,720</u>
<u>
</u>
Loss on sale of Receivables = $260,800 * 2% + 5000 = $10,216