On May $14,2024,$ Gilbert Enterprises Inc. factored receivables with Sullivan Company. The

receivables are factored on a with recourse basis. The following information pertains to the

arrangement:

$6$ marks

Carrying value of the receivables factored

Finance charge

Amount withheld by factor for sales returns and allowances

Fair value of recourse obligation

Gilbert Enterprises Inc. and Sullivan Company both follow ASPE.

Required:

Prepare the journal entry required by Gilbert Enterprises Inc. to account for the factoring

arrangement $(4$ marks$).$

Prepare the journal entry required by Sullivan Company to account for the factoring

arrangement $(2$ marks$).$