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On January 10, 2021, New Age Designs Ltd. factored receivables with a carrying amount of...

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Accounting

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On January 10, 2021, New Age Designs Ltd. factored receivables with a carrying amount of $362,600 with Classic Finance Company. Classic Finance Company assessed a finance charge of 5% of the receivables and retained 3% of the receivables. New Age Designs follows ASPE, and has a year end of August 31. Required: 1. Prepare the journal entry required on the books of New Age Designs on January 10, 2021 for the disposal of the receivables. Assume that the receivables are factored on a without recourse basis. (2 marks) 2. Prepare the journal entry required on the books of New Age Designs on January 10, 2021 for the disposal of the receivables. Assume that the receivables are factored on a with recourse basis, and that the recourse obligation has a fair value of $7.150

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