On June 30, year 1, Apaca Shoes had outstanding accounts receivable of $500,000. On July 1,...
On June 30, year 1, Apaca Shoes had outstanding accounts receivable of $500,000. On July 1, year 1, the company borrowed $350,000 from the EX Finance Corporation and signed a promissory note. Interest at 11% is payable monthly. The company assigned specific receivables totaling $500,000 as collateral for the loan. EX Finance charges a finance fee equal to 2% of the accounts receivable assigned.
Required:
Prepare the journal entry to record the borrowing on the books of Apaca Shoes.
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On June 30, year 1, Apaca Shoes had outstanding accounts
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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...
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