Part 1)
The total amount of cash received from the financing of accounts receivable is calculated as below:
Total Amount of Cash Received from Financing of Accounts Receivable = Proceeds Against Sale of Accounts Receivable + Proceeds from Assignment of Accounts Receivable after Deduction of Finance Charge
Substituting values in the above formula, we get,
Total Amount of Cash Received from Financing of Accounts Receivable = 1,390,000 + (2,500,000 - 2%*2,500,000) = $3,840,000 (which is Option A)
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Part 2)
The total amount of accounts receivable that should be reported as current asset on 12/31/2019 is derived as below:
Total Amount of Accounts Receivable to be Reported as Current Asset = Unassigned Accounts Receivable + Assigned Accounts Receivable
Substituting values in the above formula, we get,
Total Amount of Accounts Receivable to be Reported as Current Asset = 0 + 5,000,000 = $5,000,000 (which is Option C)
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Part 3)
The value of bad debt expense for the year is determined as follows:
Bad Debt Expense = Required Allowance on 12/31/2019 + Allowance fo Bad Debts before Adjustment, 12/31/2019
Substituting values in the above formula, we get,
Bad Debt Expense = 5,000,000*10% + 100,000 = $600,000 (which is Option A)
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