On June 30, 2021, Blondie Fixtures was considering alternatives to bolster its cash position. Option One called for transferring $500,000 in accounts receivable to Dogwood Finance Company without recourse for a 5% fee. Option Two calls for Blondie to transfer the $500,000 in receivables to Dogwood with recourse. Dogwood's charges a 4% fee for receivables factored with recourse. Option Two meets the conditions to be considered a sale, but Blondie estimates a $4,000 recourse liability. Under either option, Dogwood will immediately remit 90% of the factored receivables to Blondie, and retain 10%. When Dogwood collects the remaining receivables, it remits the amount, less the fee, to Blondie, Blondie estimates that the fair value of the final 15% of the receivables is $24,500 (ignoring the factoring fee). Required:
1. Prepare any necessary journal entry or entries if receivables are factored under Option One.
2. Prepare any necessary journal entry or entries if receivables are factored under Option.