29 Sparwood Manufacturing factored $240,000 of their accounts receivable to General Factor Corp., on a with recourse basis. Under the arrangement, the receivables are transferred to General Factor, who takes over the full responsibility of collection and handle all the disputes concerning service. General Factor charged a finance charge of 4% of the dollar value of the receivables, and reserves an amount equal to 5% of the receivable value to cover probable adjustments such as sales return and allowance. The recourse obligation has a fair value of $5,000. Required 1. According to ASPE, what conditions must be met for a transfer of receivables to be accounted for as a sale? 2. Prepare the general journal entry to reflect this transaction on Sparwood's books. 3. Prepare the general journal entry to reflect this transaction on General Factor's books