Black Corporation has entered into a long-term assignment agreement with a finance company. Under the terms of this agreement, Black receives 80% of the value of all accounts assigned and is charged a 1% service charge which is based upon the actual peso amount of cash received. Additionally, the finance company charges Black 12% annual interest on the outstanding loan. The following selected transactions relate to this agreement: December 1, 2014 - Accounts receivable of P175,000 are assigned. December 11, 2014 - A sales return of P1,000 on an assigned account is allowed by Black. December 31, 2014 - Collections are made on P86,000 of assigned accounts. This amount and 1 month's interest on the outstanding loan are remitted to the finance company. (For simplicity, compute interest to the nearest month
Black Corporation has entered into a long-term assignment agreement with a finance company. Under the terms of this agreement, Black receives 80% of the value of all accounts assigned and is charged a 1% service charge which is based upon the actual peso amount of cash received. Additionally, the finance company charges Black 12% annual interest on the outstanding loan. The following selected transactions relate to this agreement:
December 1, 2014 -
December 11, 2014 - A sales return of P1,000 on an assigned account is allowed by Black.
December 31, 2014 - Collections are made on P86,000 of assigned accounts. This amount and 1 month's interest on the outstanding loan are remitted to the finance company. (For simplicity, compute interest to the nearest month).
January 29, 2016 - P60,000 of assigned accounts are collected and the remainder of the loan is repaid.
a. What is the
b. What is the journal entry to record the December 31, 2014 remittance of collection?
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