Question - North Incorporated sold $300,000 of accounts receivable to Southern Inc. on a with recourse basis. Southern assesses a 3% finance charge of the amount of accounts receivable and retains an amount equal to 5% of accounts receivable for possible adjustments.
Prepare the journal entries for North Incorporated and Southern to record the sale of the accounts receivable to Southern assuming that the recourse liability has a fair value of $15,000.