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Prepare marathon journal entry for the purchase

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Reference no: EM132728680

Marathon Financial Services has agreed to purchase Tulip Corporation's outstanding accounts receivable, on a with recourse basis. Following are details regarding this arrangement:

Amount of accounts receivable sold $ 449,800
Fair value of the estimated uncollectible accounts $ 22,500
Financing fee (as a percentage of accounts receivable balance) 8%
Amount withheld for sales returns and allowances (as a percentage
of accounts receivable balance 17%

Tulip and Marathon both follow ASPE.

Problem 1: Prepare Tulip's journal entry for the sale.

Problem 2: Prepare Marathon's journal entry for the purchase of the receivables.

Reference no: EM132728680

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