Question

On December 1, 2018, General Mole borrowed $400,000 at 12% interest and pledged $500,000 in accounts receivable as collateral. Additionally, General Mole was charged a finance fee equal to 1% of the accounts receivable assigned. At the end of December, $300,000 of the assigned receivables were collected and remitted to the lender along with accrued interest. Required: Prepare journal entries to record the borrowing, the assignment of receivables, the collection on the receivables, and the recognition of interest expense. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Credit Transaction 1 General Journal Accounts receivable Accounts receivable Debit 500,000 500,000 300,000 Cash Accounts receivable 300,000 3 / 3 48,000 X Interest expense Interest payable 48,000 Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted.

Answer 1

Date		Account titles and explanation		Debit(in $)	Credit(in $)
	1	Cash		3,95,000
		Finance charges($500,000*1%)		5,000
		Accounts Payable			4,00,000
	2	Cash		3,00,000
		Accounts Receivable			3,00,000
	3	Accounts Payable		3,00,000
		Interest expenses($400,000*12%*1/12)		4,000
		Cash			3,04,000