Headland Corp. factors $ 449,000 of accounts receivable with Sage Finance Corporation on a without recourse basis on July 1, 2020. The receivables records are transferred to Sage Finance, which will receive the collections. Sage Finance assesses a finance charge of 2.00% of the amount of accounts receivable and retains an amount equal to 4% of accounts receivable to cover sales discounts, returns, and allowances. The transaction is to be recorded as a sale. Required:
a. Prepare the journal entry on July 1, 2015, for Reynolds Corp. to record the sale of receivables without recourse.
b. Prepare the journal entry on July 1, 2015, for Mateer Finance Corporation to record the purchase of receivables without recourse—please think through this. c. Explain the difference between sale of receivables with recourse as oppose to without recourse.