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Big red company has sold their Accounts receivable to their bank. The accounts receivable book...

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Accounting

Big red company has sold their Accounts receivable to their bank. The accounts receivable book value is 300,000. Their bank will loan them 90% of book value. The bank charges a 5% fee computed on book value. The remaining 10% of book value is valued at 28,000. The fee is taken off the 90% value received from the bank. First treat this without recourse and then treat this as a with recourse transaction, in other words two different journal entries are required.

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