Ralphie Corporation decides that the company needs more cash and has two financing options using its receivables: Sell $350,000 of receivables to Chip Financing Inc. without recourse. Chip Financing charges a 2% factoring fee. Pledge $500,000 of receivables to Great Plains Bank as collateral for a $200,000 loan. Great Plains charges a financing fee of 1% of the loan amount for this service, which is taken out of the loan proceeds. Assume there are no interest costs for this loan. Which of the following is true for the relative effects of the two options on Ralphie's balance sheet and income statement on the date of the transaction (sell or pledge)? Assume all A/R is collectible and there are no bad debt expenses. The company has higher total assets if selling compared to pledging.

The company has lower gross profit if selling compared to pledging.

The company has lower net income if selling compared to pledging.

The company has higher total liabilities if selling compared to pledging.

Please explain