E7-15 (LO6) (Assigning Accounts Receivable) On April 1, 2017, Rasheed Company as

Question

E7-15 (LO6) (Assigning Accounts Receivable) On April 1, 2017, Rasheed Company assigns $400,000 of its accounts recei able to the Third National Bank as collateral for a $200,000 loan due July 1, 2017. The assignment agreement calls for Rasheed to k assesses a finance charge of 2% of the accounts receivable, and interest continue to collect the receivables. Third National Ban on the loan is 10% (a realistic rate of interest for a note of this type). Instructions (a) Prepare the April 1,2017,journal entry for Rasheed Company. tb) Prepare the journalentry for Rasheed's collection of $350,000of the accounts receivable during the period from April1, 2017, through June 30, 2017 o On July 1, 2017, Rasheed paid Third National all that was due from the loan it secured on April 1, 2017. Prepare the journal entry to record this payment.

Explanation / Answer

Date General Journal Debit Credit 4/1/2017 Cash 192000 Finance Charge 2%*400000 8000 Notes payable 200000 6/30/2017 Cash 350000 Accounts Receivable 350000 7/1/2017 Notes payable 200000 Interest Expense 200000*10%*3/12 5000 Cash 205000

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.