Accounts receivable in the amount of $790,000 were assigned to the Fast Finance Company by Marsh, Inc., as security for a loan of $690,000. The finance company charged a 8% commission on the face amount of the loan, and the note bears interest at 4% per year.
During the first month, Marsh collected $420,000 on assigned accounts. This amount was remitted to the finance company along with one month's interest on the note.
Make all the entries for Marsh Inc. associated with the transfer of the accounts receivable, the loan, and the remittance to the finance company. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.) Account Titles and Explanation Debit Credit
Accounts receivable refers to a claim, which is legally enforced for the payment, which is held by the business for the supply of goods and services which have been ordered by the customers or clients and that are delivered in order to receive the payment with a specified time.
Answer and Explanation:
|Cash A/c Dr.||6,26,800|
|Commission A/c Dr.||63,200|
|To Notes payable A/c||6,90,000|
|Cash A/c Dr.||4,20,000|
|To accounts receivable A/c||4,20,000|
|Notes Payable A/c Dr.||4,20,000|
|Interest expense A/c Dr.||2933|
|To Cash A/c||4,22,933|
Become a member and unlock all Study Answers
Try it risk-free for 30 daysTry it risk-free
Ask a question
Our experts can answer your tough homework and study questions.Ask a question Ask a question
Learn more about this topic:
from Financial Accounting: Homework Help ResourceChapter 3 / Lesson 20