1. To generate cash for the purchase of inventory, Real Canadian Merchandising Group decides to sell its receivables to Palisades Financing Company. Information pertaining to this financing arrangement follows:

Amount withheld by Palisades Financing Company for returns and allowances 4%

Finance fee charged by Palisades Financing Company as percentage of receivables 3%

Dollar value of receivables sold to Palisades Financing Company $ 281,375

Estimated uncollectible accounts receivable $ 4,221

Required:

1. Assume that the receivables are sold on a without recourse basis. Prepare Real Canadian's journal entry to account for the sale of the receivables. (3 marks)

2. Assume that the receivables are sold on a without recourse basis. Prepare Palisades' journal entry to account for the purchase of the receivables. (2 marks)

3. Assume that the receivables are sold on a with recourse basis. Prepare Real Canadian's journal entry to account for the sale of the receivables. Assume that Real Canadian follows ASPE. (3 marks)