In an effort to generate cash flow in order to partially finance the construction of a new factory PPP has decided to factor some of its account receivable balance during January 2015. They entered into an agreement with Franks Financing (FF) to factor $1,000,000 of their AR under two separate agreements. The first agreement is for $500,000 of AR which is factored without recourse. PPP had previously recorded bad debt expense and still has an allowance for doubtful accounts balance relating to these accounts equal to $5,000. FF charges a financing fee of 4% of the amount of accounts receivable and retains 5% of accounts receivable to cover any potential future returns or discount liabilities. FF Estimates that 2% of the receivables will be uncollectible and creates a reserve for this amount. When a customer returns a doll PPP receives the return. FF charges the cost of returns and any discounts to PPP by debiting the Due to PPP account. During the year customers return $10,000 of merchandise to PPP and sales discounts for prompt payments total $4,000. Additionally, $8,000 of accounts receivable were written off by FF during the year. All other accounts were collected by FF and FF settled the amount due to PPP. The second factoring agreement is also for $500,000 of AR but this agreement is factored with recourse. FF charges only 2% for this arrangement because PPP agrees to provide recourse. FF withholds 7% of accounts receivable to cover any future returns or discounts. PPP had previously recorded bad debt expense and still has an allowance for doubtful accounts balance relating to these accounts equal to $12,500. PPP believes that this estimate is still an accurate estimate of the fair value of the recourse obligation. Customers returned $5,000 of merchandise and were granted discounts totaling $2,000. FF also wrote off $10,000 of accounts receivable during the year. Besides these amounts FF collected the remaining accounts receivable and settled the balance of the amount due to PPP. Part III Required: 1) Prepare the journal entries of PPPs books to account for the first factoring agreement without recourse. 2) Prepare the journal entries of FFs books to account for the first factoring agreement without recourse. 3) Prepare the journal entries of PPPs books to account for the second factoring agreement with recourse. 4) Prepare the journal entries of FFs books to account for the second factoring agreement with recourse