a) Lark Corporation factors $260,800 of Accounts receivable with Kathleen Battle Financing, Inc will collect the receivables. The receivables records are transferred to Kathleen battle financing on august 15, 2017. Kathleen Battle financing assesses a financing assesses a finance charge of 25 of the amount of accounts receivable and also reserves an amount equal to 4% of accounts receivable to cover probable adjustment receivable to cover probable adjustments.
B) Assume that the conditions are met for the transfer of receivables with recourse to be accounted for a sale. Prepare the journal entry on August 15, 2017, for larkspur to record the sale of receivables, assuming the recourse liability has fair value of $5,000.