Growth Strategy Financial Corp. (GSFC) has made an offer to SFC to purchase (factor) 80% of the good receivables. GSFC has defined good receivables as those customer balances 90 days or less. GSFC has reviewed the aged Accounts Receivable and has determined that the balance of good Accounts Receivables is $720,000. The factoring proposal made by GSFC is two-fold. The factoring can be with recourse or without recourse. The details of the proposals are as follows: i. Proposal A - Without Recourse SFC will transfer 80% of the good Accounts Receivables to GSFC with GSFC having the contractual rights to receive the customer payments directly. SFC will receive 82% of the value of the transferred Accounts Receivable and SFC will have no continuing interest in the transferred Accounts Receivable. ii. Proposal B - With Recourse SFC will transfer 80% of the good Accounts Receivable to GSFC with GSFC collecting the accounts. GSFC will assess a charge of 9.0% of the transferred Accounts Receivable and will also reserve an amount equal to 5.25% to cover probable adjustments payable to customers. It is estimated that the fair value of the recourse obligation would be 10% of the transferred Accounts Receivable.

Required all journal Entries