Question

need help with the last part

Preparing Entries for a Secured Borrowing and Subsequent Collections and Payments A note payable was executed by Sterling Inc. to Miami Finance Company. Sterling Inc. used $432,000 of its accounts receivable as collateral for the loan. The contract provided that Miami would advance 85% of the gross amount of the receivables. Sterling Inc. continues to collect payments for the receivables and the cash from customers is then remitted to the finance company. The cash remitted is first applied to the finance charges, with the remainder applied to principal. During the first month, customers owing $295,200 paid cash, less sales returns and allowances of $11,520, originally recorded as a refund liability. The finance charge at the end of the first month was $2,520. During the second month, the remaining receivables were collected in full, except for $2,880 off as uncollectible. Final settlement was effected with the finance company, including payment of an additional finance charge of $1,080. Cr. a. Record the entry for Sterling to record the secured borrowing. Account Name Dr. Cash 367,200 0 Note Payable O 367,200 b. Record the entries for Sterling to record (1) the collections and (2) the payment to Miami for the first month. Account Name Dr. Cr. Cash 283,680 Refund Liability 11,520 Accounts Receivable O 295,200 To record collection on receivables for first month Interest Expense 2,520 Note Payable 281,160 Cash 0 283,680 To record payment to Miami for the first month O c. Record the entries for Sterling to record (1) the collections for the second month and (2) the final payment to Miami. Account Name Dr. Cr. Cash 133,920 Allowance for Doubtful A. 2,880 Accounts Receivable . 0 136,800 To record collection on receivables for second month Interest Expense 1,080 Note Payable 138,600 x Cash o 138,600 x To record final payment to Miami Check

Answer 1

		Information-
		Borrower	Sterling Inc
		Account Recble	432,000.00
		Loan	367,200.00
		Final Principal Payment to Miami in second month ( 367200 as reduced by 281160 which was paid in first month)	86,040.00
		Additional Finance charge paid in second month	1,080.00
		Amount Receivable in second month	136,800.00
		Amount actually received in second month	133,920.00
		Answer of last part as required i.e. Part ©
		Account Name			Debit Amount	Credit Amount
		Cash Account			133,920.00
		Allowance for Doubtful Accounts			2,880.00
		Accounts Receivable				136,800.00
		(Being receivable collection for second month recorded)
		Account Name			Debit Amount	Credit Amount
		Interest Expense			1,080.00
		Note Payable			86,040.00
		Cash				87,120.00
		(Being final payment made to Miami)