Samson Wholesale Beverage Company regularly factors its accounts receivable with the Milpitas Finance Company. On April 30, 2018, the company transferred $870,000 of accounts receivable to Milpitas. The transfer was made without recourse. Milpitas remits 85% of the factored amount and retains 15%. When Milpitas collects the receivables, it remits to Samson the retained amount less a 2% fee (2% of the total factored amount). Samson estimates the fair value of the last 15% of its receivables to be $67,000.

Prepare journal entries for Samson Wholesale Beverage for the transfer of accounts receivable on April 30 assuming the sale criteria are met. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Journal Entries on April 30:

No journal entry with respect to $67,000

Debit Cash with (85% of $870,000) $739,500

Debit Loss on Factoring (2% of $870,00) $17,400

Debit Receivable from Factor with $113,100

Credit Accounts Receivable with $870,000

Explanation:

a) The cash receipts is 85% of the factored amount, i. e. $870,000.

b) Loss on factoring is the 2% fee payable to the factor.

c) The Receivable from Factor is 13% of the receivables.

d) Since the factoring was without recourse, the implication is that the fair value of the 15% or $67,000 is not relevant to Samson Wholesale Beverage. Therefore, there is no journal entry to be made in its respect.