Question 2

Alpha factors (transfers/sells) some accounts receivable at the end of the year and receives cash. Accounts totaling $275,000 are transferred to First Factors Inc., with recourse. First Factors retains, as a deposit, 3% of the balances and assessed a finance charge of 4% on the transfer. First Factors will collect the receivables from Alphas customers. The fair value of the recourse obligation is $4,850. Required: Prepare the required journal entry(ies) for Alpha.

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