On March 1, 2021, X Co. assigns $60,000 of its accounts receivable as a collateral for a loan from John Finance Company. X signed a Note Payable to John for $50,0003; John then takes a fee of 5% of the accounts receivable. John also charges 12% interest on the amount of cash X received. If X collects $10,000 in March and remits this amount plus interest owed to John on March 31st, the journal entry X records on March 31st will include:
On March 1, 2021, X Co. assigns $60,000 of its accounts receivable as a collateral for a loan from John Finance Company. X signed a Note Payable to John for $50,0003; John then takes a fee of 5% of the accounts receivable. John also charges 12% interest on the amount of cash X received. If X collects $10,000 in March and remits this amount plus interest owed to John on March 31st, the journal entry X records on March 31st will include:
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter6: Cash And Receivables
Section: Chapter Questions
Problem 11RE: On December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to...
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Step 1 Workings
Interest = 47000* 1% = 470
Principal repayment = 10,000
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