Assume That the Transaction Was a Factoring Arrangement with Recourse

Assume that the transaction was a factoring arrangement with recourse and included a holdback of $6,000.If the fair value of the recourse obligation is equal to the allowance of $3,500,which one of the following entries will Ritter make to record this transaction?

A) $\begin{array}{lrr}\text { DR Cash } & 100,000 & \\\text { DR Allowance for doubtful accounts } & 3,500 & \\\text { CR Accounts receivable } & & 100,000 \\\text { CR Recourse obligation } && 3,500\end{array}$
B) $\begin{array}{lrr}\text { DR Cash } & 88,000 & \\\text { DR Loss on sale of receivables } & 6,000 & \\\text { DR Allowance for doubtful accounts } & 3,500 & \\\text { DR Due from Hisker Enterprises } & 6,000 & \\\text { CR Accounts receivable } & & 100,000 \\\quad \text { CR Recourse obligation } & & 3,500\end{array}$
C) $\begin{array}{lll}\text { DR Cash } & 88,000 & \\\text { DR Loss on sale of receivables } & 12,000 & \\\quad \text { CR Accounts receivable } & & 100,000\end{array}$
D) $\begin{array}{lll}\text { DR Cash } & 88,000 & \\\text { DR Loss on sale of receivables } & 12,000 & \\\quad \text { CR Due to Hisker Enterprises } & & 100,000\end{array}$

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