Taylored Corp. factored $400,000 of accounts receivable to
Rich Corp. on July 1, year 2. Control was surrendered by Taylored.
Rich accepted the receivables subject to recourse for nonpayment.
Rich assessed a fee of 2% and retains a holdback equal
to 5% of the accounts receivable. In addition, Rich charged 15%
interest computed on a weighted-average time to maturity of the
receivables of forty-one days. The fair value of the recourse obligation
Taylored will receive and record cash of