Question: Vaughn Corporation factors $275,100 of accounts receivable with Kathleen Battle Financing, Inc. on a with recourse basis. Kathleen Battle Financing will collect the receivables.

Vaughn Corporation factors $275,100 of accounts receivable with Kathleen Battle Financing, Inc.

Vaughn Corporation factors $275,100 of accounts receivable with Kathleen Battle Financing, Inc. on a with recourse basis. Kathleen Battle Financing will collect the receivables. The receivables records are transferred to Kathleen Battle Financing on August 15, 2025. Kathleen Battle Financing assesses a finance charge of 2% of the amount of accounts receivable and also reserves an amount equal to 4% of accounts receivable to cover probable adjustments. (b) Assume that the conditions are met for a transfer of receivables with recourse to be accounted for as a sale. Prepare the journal entry on August 15, 2025, for Vaughn to record the sale of receivables, assuming the recourse obligation has a fair value of $3,670. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.) Date Account Titles and Explanation Aug. 15, 2025 Cash Loss on Sale of Receivables Recourse Liability Accounts Receivable Debit 258594 11004 9172 Credit 3670 275100

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