Question
Bonita Corp. factors $356,000 of accounts receivable with Windsor Finance Corporation on a without recourse basis on July 1, 2020. The receivables records are transferred
Bonita Corp. factors $356,000 of accounts receivable with Windsor Finance Corporation on a without recourse basis on July 1, 2020. The receivables records are transferred to Windsor Finance, which will receive the collections. Windsor Finance assesses a finance charge of 1.70% of the amount of accounts receivable and retains an amount equal to 5% of accounts receivable to cover sales discounts, returns, and allowances. The transaction is to be recorded as a sale.
Prepare the journal entry on July 1, 2020, for Bonita Corp. to record the sale of receivables without recourse
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