On August 4th Ridge Hill Company sells $700,000 of its accounts receivable to the Cheesecake Factoring Company (CFC). The contractual rights have been transferred to CFC and the company will receive the payments when collected by Ridge Hill. That is, Ridge Hill will still administer the collection of accounts receivable and upon receiving the collection, the company will make payment to CFC. 

Assume that this transaction meets all three criteria of FASB ASC Topic 860. 

Below are the relevant information regarding the factoring

• The fee charged for factoring service: $14,000 

• Balance retained by CFC: $10,000 

Required: 

1. Prepare the journal entry to record the transaction assuming that the factoring agreement was without recourse. 

2. Prepare the journal entry or entries to record the transaction assuming that the factoring agreement was with recourse. Ridge Hill estimates the recourse obligation at $8,000. 

3. Prepare the journal entry to record this agreement assuming that the CFC is not permitted to pledge, assign or sell any of the receivables over the term of the contract.