Accounting for the Sale of Accounts Receivable

On July 15, Mann Company sold $600,000 in accounts receivable for cash of $500,000. The factor withheld 10% of the cash proceeds to allow for possible customer returns or account adjustments. An Allowance for Bad Debts of $80,000 had previously been established by Mann in relation to these accounts.

1. Make the journal entry necessary on Mann's books to record the sale of the accounts. If an amount box does not require an entry, leave it blank.

2. Make the journal entry necessary on Mann's books to record final settlement of the factoring arrangement. No customer returns or account adjustments occurred in relation to the accounts.