III. Sale of Accounts Receivable without recourse:

Assume the same sale of AR took place as described above, except that the sale is without recourse.

Instructions: Prepare the journal entry for Boxster to record the sale of the AR. (1 JE)

Other Information:

Boxster sells $100,000 of Accounts Receivable with recourse to Conway Factors, receiving cash. Conway factors retains 7% to cover possible sales returns, etc.

Conway Factors will charge Boxster a 5% factoring fee, due at the time the receivables are factored.

Once Conway Factors has collected the receivables, it will remit the retained amount to Boxster.

Boxster estimates the fair value of the retained amount to be $5,000.

Boxster estimates the fair value of the recourse obligation to be $3,000.