On April 1 2015 Smith Inc factored 200,000 of accounts receivable to Cameron Factors Inc on a with recourse basis. Cameron assesses a 2% finance charge on the amount of the factored accounts receivable and retains an amount equal to 6% of the factored accounts receivable for possible adjustments.
1. Prepare the required journal entry for Smith Inc to record the factoring of the accounts receivable assuming that the recourse liability has a fair value of 10,000
2. Alternatively, prepare the required journal entry for Smith Inc to record the factoring of the accounts receivable assuming instead that the factoring took place without recourse.