Problem 7

Hillcrest Tech, Inc. factors $3,000,000 of accounts receivable with Factor, Inc.. Factor Inc. assesses a finance charge of 2 percent of the amount of accounts receivable and retains an amount equal to 4 percent of the accounts receivable (for probable adjustments). Prepare the journal entries for Hillcrests make the following journal entries:

( 5 points)

a. For the receivables transferred without recourse.

b. For the receivables transferred with recourse, assuming estimated recourse obligation is $30,000