On April 1, Algiers Ltd. factored $500,000 of accounts receivable with Delhi Finance Corp. on a without recourse basis. Under the arrangement, Algiers was to handle disputes concerning service, and Delhi Finance was to make the collections, handle the sales discounts, and absorb the credit losses. Delhi Finance assessed a finance charge of 6% of the total accounts receivable factored and retained an amount equal to 3% of the total receivables to cover sales discounts.

Required

1. Prepare the journal entry required on Algiers' books on April 1. (3 marks)

Entry on Algiers books	Debit	Credit

Question 2 Part B.(continued)

b) Prepare the journal entry required on Delhi Finances books on April 1. (3 marks)

Entry on Delhi Finances books	Debit	Credit