Question 3 On April 1, 2014, Ibrahim Corporation assigns $381,000 of its account

Question

Question 3

On April 1, 2014, Ibrahim Corporation assigns $381,000 of its accounts receivable to First National Bank as collateral for a $201,600 loan that is due July 1, 2014. The assignment agreement calls for Ibrahim to continue to collect the receivables. First National Bank assesses a finance charge of 2% of the accounts receivable, and interest on the loan is 9%, a realistic rate for a note of this type.

(a)

Account Titles and Explanation

Debit

Credit

Question 3

On April 1, 2014, Ibrahim Corporation assigns $381,000 of its accounts receivable to First National Bank as collateral for a $201,600 loan that is due July 1, 2014. The assignment agreement calls for Ibrahim to continue to collect the receivables. First National Bank assesses a finance charge of 2% of the accounts receivable, and interest on the loan is 9%, a realistic rate for a note of this type.

Explanation / Answer

01-Apr Cash $   193,980.00 Finance Charge $        7,620.00          Notes payable $201,600 (2%*381,000)

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

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