E7-21 (L06,7) (Transfer of Receivables) Use the information for Jones Company as presented in E7-20. Jones is planning to

factor some accounts receivable at the end of the year. Accounts totaling $25,000 will be transferred to Credit Factors, Inc. with

recourse. Credit Factors will retain 5% of the balances for probable adjustments and assesses a finance charge of 4%. The fair

value of the recourse obligation is $1,200.

Instructions

(a) Prepare the journal entry to record the sale of the receivables.

(b) Compute Joness accounts receivable turnover for the year, assuming the receivables are sold, and discuss how factoring

of receivables affects the turnover ratio.

please show calculations