On May 1. Ali, Inc. factored $800,000 of accounts receivable with Rami Finance on a without recourse basis. Under the arrangement, Ali was to handle disputes concerning, service, and Rati,Finance

was to make the collections, handle the sales discounts, and absorb the credit losses. Rami Finance assessed a finance charge of 6% of the total accounts receivable factored and retained an

amount equal to 296 of the total receivables to cover sales discounts. Instructions: Prepare the journal entry required on Al's books on May 1.