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ABC Inc. factored $164,900 of accounts receivable with First Factor Corporation on a without- recourse basis. First Factor assesses a 2% finance charge of the

ABC Inc. factored $164,900 of accounts receivable with First Factor Corporation on a without- recourse basis. First Factor assesses a 2% finance charge of the amount of accounts receivable and retains an amount equal to 6% of accounts receivable for possible adjustments.

Instructions:

  1. Prepare the journal entry required on ABCs books
  2. Prepare the journal entry required on First Factors books.

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