KFH Corporation factored, with guarantee, $300,000 of accounts receivable with HSBC Financing. The finance charge is 3%, and 5% was retained to cover sales discounts, sales returns, and sales allowances.

Required:each one carries 2 marks

1. Prepare the necessary journal entries in both company records.
2. Assume that the sales were without guarantee basis, record the necessary journal entries in both companies records.
3. Explain the differences between sale of receivables with guarantee and without guarantee basis.