Pharoah Company reports the following financial information before adjustments.

Exercise 7-19 Pharoah Corp. factors $361,000 of accounts receivable with Novak Finance Corporation on a without recourse basis on July 1, 2020. The receivables records are transferred to Novak Finance, which will receive the collections. Novak Finance assesses a finance charge of 1.70% of the amount of accounts receivable and retains an amount equal to 5% of accounts receivable to cover sales discounts, returns, and allowances. The transaction is to be recorded as a sale.

Prepare the journal entry on July 1, 2020, for Pharoah Corp. to record the sale of receivables without recourse.

Prepare the journal entry to record bad debt expense assuming Pharoah Company estimates bad debts at (a) 4% of accounts receivable and (b) 4% of accounts receivable but Allowance for Doubtful Accounts had a $1,570 debit balance.