BigC Co. factored $96,000 of its accounts receivable with recourse to World Finance Company. World Finance reserved an amount equal to 10% of the factored receivables to cover potential adjustments for sales returns and allowance and charged 5% commission on the gross amount of the receivables. All conditions for a sale of accounts receivables have been met. The fair value of recourse obligations to be $1,600.

Required: Prepare the journal entries for BigC to record the following:

a) the sale of the receivables

b) sales returns of $2,500 occurred on the factored accounts receivable. The company uses the allowance method to record the sales returns.

c) there is no further sales return and allowance from the customer. BigC Co. received the remaining amount from World Finance.