JFK Corp. factors $300,000 of with LBJ Finance on a without recourse basis on July 1, 2020. The receivables records are transferred to LBJ Finance, which will receive the collections. LBJ Finance assesses a finance charge of 1½% of the amount of and retains an amount equal to 4% of 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, 2020, for JFK Corp. to record the sale of receivables without recourse.
b. Prepare the journal entry on July 1, 2020, for LBJ Finance to record the purchase of receivables without recourse.
