On June 30, 2016, the High Five Surfboard Company had outstanding accounts receivable of $720,000. On July 1, 2016, the company borrowed $570,000 from the Equitable Finance Corporation and signed a promissory note. Interest at 10% is payable monthly. The company assigned specific receivables totaling $720,000 as collateral for the loan. Equitable Finance charges a finance fee equal to 1.2% of the accounts receivable assigned.
Required: Prepare the journal entry to record the borrowing on the books of High Five Surfboard. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Accounts receivable refers to the amount that is due from a customer on a credit sale, either for products and services that they have purchased but have yet to pay for. It is shown as a part of the current assets on the balance sheet of a company.
Answer and Explanation:
The journal entry to record the borrowing on the books of High Five Surfboard is as follows:
|Date||Particulars||Debit ($)||Credit ($)|
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fromChapter 3 / Lesson 20